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I'm of the opinion that government is so big and so powerful now, and the average person idiotically relies on it so heavily, that much higher inflation is inevitable. They're certainly going to do their very best to keep a deflationary collapse from happening, because they all fear what it was like in the United States in the 1930s. Yet not too many people think about Germany's inflationary collapse in the 1920s. It was much more unpleasant.

Inflation is the enemy of the person who works, saves and invests. But it's the friend of the speculator.

BIG GOLD: Why do you think Gold Stocks have lagged while the Gold Market itself has taken off?

DOUG CASEY: Gold Stocks are a play on gold, but they are also stocks. The best environment for them is when both gold and the general market are moving up, and lately the stock market has been problematical.

People are going to panic into gold, because it's cash money in the most basic form. Gold Stocks are not money they're speculative vehicles. And despite the strength in gold, the costs and risks of finding and building mines have gone up just as fast in the last couple of years.

There's no necessity for Gold Mining Stocks to move in lockstep with gold itself. That said, I think gold stocks are really going to howl as gold goes into the Mania Stage.

BIG GOLD: The water in the pot is definitely getting hotter. Where do you think gold is going this year?

DOUG CASEY: Gold has been in a bull market since 2001. It's gone up, on average, about 25% per year compounded, and there's absolutely no reason the bull market should stop now. On the contrary, there's every reason to believe that the gold bull market, having gone through its Stealth Stage and still being in its Wall of Worry stage, is going to hit the Mania Stage.

To sell now would be to leave the big money on the table. My best advice is to be right and sit tight. And that means staying long until you see a golden bull tearing apart the New York Stock Exchange on the front cover of Newsweek magazine, at which point it will be time to sell.

BIG GOLD: What price do you think gold will hit in 2008?