It’s been said that all of the gold mined throughout the history of mankind could fit into just three Olympic-sized swimming pools.

With rising fuel and labor costs, successful mining operations have been few and far between, simply because there’s very little, if any, easily accessible gold, as well as its close cousin silver, left in the ground. According to Peak Resources, the supply of gold is now so limited that just 1 in 1600 new gold projects ever get off the ground. One of the key reasons for this is because mine operators have to dig deeper and spend much more money than ever before – often times just to break even.

When you consider the supply fundamentals, and couple them with the high levels of demand experienced in recent months, you can see that regardless of what is listed as the official ‘paper market’ price, gold is likely going much higher. And that’s before we even get into the monetary expansion aspect of the discussion.

While economists like Federal Reserve Chairman Ben Bernanke vehemently deny gold’s value as a mechanism of exchange, and leading market analysts take to writing obituaries for gold’s demise amid recent price swings, the fact is that all signs point to a continuation of the long-term trend.

Gold is going higher.

Michael Wittmeyer, the President of leading online gold and silver dealer JM Bullion, shares the sentiment of many precious metals investors regarding recent price movements:

There seems to be a segregation between paper and physical metals at the moment, as physical demand has never been so strong, yet metals continue to slide in the paper markets and fail to find support at any of the historical key levels thus far.

My personal recommendation is to stay the course, try to lock in the lower prices to average in a lower overall cost-basis on your metals portfolio, and stay focused on the big picture, where the fundamental reasons to own physical metals are as strong as ever.

If you’ve been paying attention, then you’ve no doubt realized that the fundamentals Mr. Wittmeyer speaks of are pretty clear cut.

The big picture is that the fundamentals for gold, despite a massive hit to its price in recent months, have not changed.

The following micro-documentary explains why we may well be on the cusp of Peak Gold, a turning point in the precious metals market that will continue to strain supply while demand across the world explodes to unprecedented levels:

Gold has no flag or allegiance… as the fiat currencies get devalued to deal with the sovereign debt crisis, gold demand will soar.

The problem and opportunity we see is that the supply is already maxed out. So, if a wave of demand comes, we can see the gold price move rapidly on supply and demand fundamentals.

The inflation will simply be icing on the cake.

Via Peak Resources:

So, the question is, do we follow the direction of Federal Reserve Chairman Ben Bernanke, who suggests gold is simply a relic, and focus our investments on his preferred asset class – the US dollar denominated Treasury Bond?

Or, do we side with over 5,000 years of history, which has shown precious metals to be the go-to store of wealth during times of uncertainty and upheaval?