This is a rush transcript from "Glenn Beck," November 4, 2009. This copy may not be in its final form and may be updated.

JUDGE ANDREW NAPOLITANO, GUEST HOST: The price of gold is now closing in on $1,100 an ounce after already blowing through record highs. Why the surge — the surge in gold?

Here to explain is Jonathon Hoenig. He's the portfolio manager of Capitalist Pig Asset Management.

I have never told you this. I love the name of your company, Jonathan. Welcome to The "Glenn Beck Program."

JONATHAN HOENIG, CAPITALIST PIG ASSET MANAGEMENT: Thank you, Judge.

NAPOLITANO: There was a time.

HOENIG: Thank you very much.

NAPOLITANO: You're welcome.

There was a time, Jonathan, when the dollar and gold were tied together, where the dollars had to be backed up by gold. Why was that? What was the reason for that?

HOENIG: Because, Judge, you know, a dollar is a piece of paper and gold is a store of value. And, of course, that would go anywhere these days. So, that my gold, this is the hottest investment literally in the world right now. Gold is a store of value — it has been literally since Christ walked the Earth.

And as more and more people are dumping the dollar these days, they're turning to gold as a store of wealth, which is exactly what's pushing it, as you pointed out, to new all-time highs today.

NAPOLITANO: All right. And so, politicians pushed for the separation of the dollar from gold, so that they could print dollars without having gold to back it up, so that they could be undisciplined and have all the cash to spend that they wanted without having to have a reserve of gold so that the dollar was worth something.

HOENIG: It's true. And, you know, for a while, at least in this country, Judge, it seemed to work. But we've really seen that sort of the change and that change has accelerated. In fact, you know, over 70 percent of the world's central bank holdings used to be held in U.S. dollars. Now, that's only down to about 64 percent.

And the latest bit of news that has prompted gold to lurch to higher prices today is the news that India is actually diversifying out of the dollar and into gold.

So, we'll see more and more of that move, not only by central banks but by individuals, literally getting out of the dollar and getting into gold as a store of value.

NAPOLITANO: Why is the price of gold going through the roof?

HOENIG: Well, you know, there's a number of factors. One of which we talked about is literally the decline in the value of the dollar. And, you know, gold has always been thought of, Judge, as a hedge against the value of a dollar. The lower the value of the dollar goes, the higher gold prices go. So, we're certainly seeing that as well.

I also believe that the notion of private wealth, you know, when you have a mutual fund, you have a bank account, you have a savings account, all of that is very visible to the U.S. government. And I think at a time in which — as you were talking about with your earlier guests — government is playing a bigger and bigger role in almost every aspect of our life, the notion of having a couple of Krugerrands, a couple of bars in a safety deposit box somewhere is very attractive to many, many investors.

NAPOLITANO: All right. When the dollar is decoupled from gold, when the value of the dollar goes down, when it can buy less and less, and when the value of an ounce of gold goes up — is that an indication of something likely to come, Jonathan?

HOENIG: It is, Judge, and it's inflation. You know — I mean, people are looking at their stock portfolios that have basically been flat now for 10 years. Well, you know what, the value of your dollars, literally the dollars in your pocket, in your bank account have declined by about 25 percent over that period of time. And, you know, you hear it from people now, not only just economists but you literally going to hear it from clients of mine and people you interact with on the street, they realize that their dollars are purchasing less and less and less.

And, you know, Judge, I brought in a dollar of mine, $100 bill.

NAPOLITANO: I know, I want to play a little.

HOENIG: But it's a dollar — sure.

NAPOLITANO: I want to play a little game, Jonathan Hoenig. On one hand, I want you to hold this Zimbabwean trillion dollar bill.

HOENIG: Yes.

NAPOLITANO: And in the other hand, I want you to hold an ounce of gold.

HOENIG: Oh, not a trillion, Judge, 100 trillion.

NAPOLITANO: A hundred trillion.

HOENIG: This is a Zimbabwean $100 trillion bill.

NAPOLITANO: I couldn't even count the money.

(CROSSTALK)

NAPOLITANO: OK, which can buy more?

(CROSSTALK)

NAPOLITANO: A hundred trillion dollar bill or an ounce of gold?

HOENIG: Right. Yes. It is worthless. This is a 10-ounce bar of gold. It's about $11,000. This is literally worthless.

And I think it reinforces that point, Judge, that, you know, the word "credit," which we hear so valuable to the economy, so vital to the economy, the word "credit" literally is from the Latin word "to believe."

NAPOLITANO: Right.

HOENIG: People believe less and less in the value of our credit, and the value of our currency. That's why they're turning to gold.

NAPOLITANO: It's a scary picture, but we thank you for painting it for us, Jonathan Hoenig.

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