Editorial: Gold cracks US$1,000 again

Gold’s day-long breach of the US$1,000-per-oz.-mark was the biggest news for gold bugs around the world on Sept. 8.

Gold leaped US$50 during the previous week and had an all-time-nominal-high morning fix of US$1,004.50 per oz. in London on Sept. 8. It then traded briefly above US$1,005 per oz. before falling back to the mid-US$990s.

That exceeds the past year’s US$994-per-oz. high reached in February 2009 and the all-time nominal high of US$1,002.80 per oz. attained in March 2008.

Gold is now holding solidly above its 1980 spike of US$850 per oz., which would be well north of US$2,000 per oz. in today’s dollars.

The big-picture reasons for gold’s inevitable ascendance have been expounded upon in these pages for more than a decade, but this latest, brief surge above US$1,000 per oz. seems to be rooted in new and widening doubts that the U.S. government has any inclination to protect the value of the greenback.

The already excessive debt loads that doubled under the Bush Administration are now set to double again under the Obama Administration, and that’s without any new socialized health care plan.

The 1960s counterculture radicals who now run the U.S. government are keenly aware that crises — real or cynically provoked — are exceedingly useful times to consolidate power and rapidly push unpopular agendas past a frightened and off-balance electorate.

It’s a smart, if misguided, bunch running the show in the U.S. now, so more people are coming to realize with some horror that the relentless hollowing out of the greenback’s value is a preferred, chosen policy option that advances the government’s wider agenda to increase its power at the expense of Wall and Main Streets alike.

It all plays into gold’s perennial role as a store of value in turbulent times, and those who understand its role stand to benefit.

The gold price is behaving as predicted now that U.S. debt in its myriad forms is spiralling well beyond the point of normal repayment and into the painful realm of future massive currency devaluation.