In W. Somerset Maugham’s novel THE RAZOR’S EDGE, the erudite friend of the narrator tells how he escaped the stock market crash of 1929.

Elliott is a 62-year-old American man living both in Paris and on Monaco’s stretch of the Riviera. He collects art and arranges wickedly snobbish dinners for his friends. Yet he is generous almost to a fault.

Elliott tells the narrator how priests at the Vatican in Rome, a month before the October 1929 crash of the New York market, convinced him to sell all of his shares and put the proceeds in gold. He tells the narrator how he made “a packet.”

Elliott later becomes a great donor to the Catholic Church, which is one of the largest non-government owners of gold and gold pieces. Elliott, now wealthier than ever in his life, uses his gold profits to buy, at a fraction of the price, shares he had owned before the market crash. He also finances his niece and her family, who have fallen on hard times.

Tales of lost and found fortunes and grand speculations are found across much of the world’s literature during the 1930s and 1940s. Maugham’s novel was written in 1944. The author Dashiell Hammett occasionally has Sam Spade or another of his characters speculating on the price of gold or searching for missing gold coins and loot. F. Scott Fitzgerald’s THE GREAT GATSBY easily could have been titled THE GREAT SPECULATOR.

I love THE RAZOR’S EDGE because it is so real. But for the musty armoires, what Maugham describes easily can pass for today. The gold part especially works well. Gold’s compound annual return from 2001 through 2006 was about 30%. Anyone who was withdrawing money from stocks and bonds during those years and holding physical gold, and cash, is sitting on a “packet.”

Bill Murphy, the former American football player who started the Gold Anti Trust Action Committee, is not a priest. No one ever has seen Murphy don robes – except perhaps at drunken toga parties and the occasional spa.

GATA, as its pro-gold members call it, is to gold what the Vatican is to Catholicism doctrine. Mr. Murphy, a hard asset guy with a soft heart, has been encouraging his GATA members to keep a close eye on the close of the December gold futures contracts that trade in the United States. The contracts change hands on COMEX in New York and CBT in Chicago and come due at month’s end.

“With gold premiums for various coins and bars at historic highs, GATA and others are urging people with some money on hand to take delivery of Comex or CBT gold because it is SO cheap compared to other ways of purchasing real gold,” Murphy preaches, er, sorry … Bill tells me. (Please see ThomWatch for more on coin premiums.)

Now, I am not sure if Bill ever has read THE RAZOR’S EDGE. At the beginning, Maugham cites one of the Upanishads: "The sharp edge of a razor is difficult to pass over; thus the wise say the path to Salvation is hard.”

I also am not sure if the talk is true -- that Murphy has an actual heart of gold.

But I can tell you Bill Murphy has been passing over razors’ edges for about 10 years, ever since he and his cohorts at GATA caught my attention with treatises about gold, gold’s influence on currency markets and possible political and financial forces that attempt to manipulate gold’s price.

Encumbered reserves

When I asked Mr. Bill whether America, and other nations, might consider returning to a currency system backed by a hard asset such as gold, Bill responded, ‘The United States hates gold, and since it has been suppressing the price for so many years, it is hard for me to seeing the U.S. allowing gold to be used in any way for standard currency purposes, at least for now ... especially since a large amount of our 8,133.5 tonnes (IN RESERVE) is most likely encumbered, meaning it is no longer there.”

America has the largest reserve of gold bars on the planet. So who would know where and how America catalogs and rates and uses that gold? (The official price of an ounce of gold is about $42, but I just paid $840 for an American Eagle one-ounce gold coin at the San Francisco Hard Assets Show this past weekend.)

Says Murphy, “We have not had a real independent audit since the Eisenhower Administration.”

I think Mr. Bill Murphy and the members of GATA are going to make a “packet” in the next few weeks and months and years. I really do. If you want to learn more about gold deliveries and futures contracts and how the paper price of a metal can differ from its physical price (coins, bars, jewelry and so on), please turn to Rob Kirby, whose treatment of the issue on Stockhouse is compelling and just might put you on a razor’s edge. (Please see Kirby’s article.)

That is it for now. The second issue of Ticker Trax By Thom Calandra is on its way to paying subscribers. It is hot. We will have in the new service what might become the planet’s best short-sale candidate, plus more from the best and the brightest across the planet, starting up north there in gold country, where some miners really do have hearts of gold.

Ticker Trax By Thom Calandra will explore planet Earth for those few stakes that offer the prospect of excellent, in some cases cosmic, returns. It is for those who are entirely at ease with stratospheric levels of risk. (Please click here for charter sign-up.) Ticker Trax is for those who make select, high-octane investments and honor those stakes with on-spot research, patience and due diligence.

As we complete our investment research, we fully hope and expect, but cannot and do not promise, stratospheric returns. (Please see inaugural issue of Ticker Trax.) See you on Ticker Trax.

HOLDINGS: Thom’s cosmos of holdings is listed for free Stockhouse members on www.Stockhouse.com under the “portfolio setting” for user TCALANDRA. He and his family also own recently minted gold coins. For more ThomWatch, please click here. 

THOM’S STORY: Thom Calandra helped his audience find value in a quagmire of investment choices. He also settled a valid complaint with the U.S. Securities & Exchange Commission in 2005. Thom co-founded CBS MarketWatch, MarketWatch.com and FT MarketWatch in Europe. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom fancied $300-ounce gold before that metal became an investment rage. Thom visited bioscience companies, metals mines and scores of thin-crust pie joints across the planet in a search for profit, fashion and pizze de trippa gorgonzola. Thom's novel PABLO BY NUMBERS was completed in summer 2008.