This time last year, in Australian dollar terms, gold was worth about $980 an ounce. Now it's fetching more than $1264 an oz. When the metal is priced in U.S. dollars, it is only about 3% up if you take year-end price comparisons. Small gain—but up nevertheless, which is more than you can say for almost anything else.
All the indications are that supplies of physical gold are still very tight. You would have to think that gold bar hoarding is surging somewhere because, otherwise, the news from India would have sent the metal's price plunging. The world's biggest importer of the yellow metal saw its purchases of gold slump last year—down 47% in 2008 to 402 tonnes compared to 2007. The high price has put off Indians from buying jewelry, so elsewhere there must be a substantial increase in the quantities going into safety deposit boxes and under beds.
Gavin Wendt of Fat Prophets recently dubbed it "the silent gold rush." And his is a plausible case. For the past 38 years, following Richard Nixon's decision to suspend gold convertibility, the world has been on the dollar standard. Only one country—the U.S.—had the benefit of borrowing and repaying debt in its own currency.
But the greenback's days as a standard currency are numbered (and will be shortened further once Barack Obama starts unleashing more trillions of borrowed or printed money to delay the day of reckoning). Wendt says the smart money has twigged to all this. "Investors who understand gold's role as an international currency are selling their surplus paper dollars and buying the yellow metal," he writes.