In the last two months of 2008, MZM—a measure of the money supply—grew at 11% per year. Gold rose. With the Obama bailout, and the Fed's bailouts, it seems a cinch that the price of gold will go up.
At $879 an ounce, gold is today no higher than it was 29 years ago. In January 1980, it briefly hit $875. If it were just to reach the same level now, adjusted for inflation, it would have to go to $2,400.
Looking at the facts, a sensible person would conclude: the price of gold is going up. Most likely, it will go to three times its current price. And so, sensible people seem to be doing the sensible thing—the World Gold Council says demand for gold is increasing fast.
The price of gold rose more than $100, while every other asset (save U.S. Treasury paper) fell. Gold coins have become difficult to buy; the premium on a bullion coin has risen to about 10% over the gold price. Still, the price of an ounce of gold is under $900. . .not over $2,000.
Does the big money—the inside money—see something we don't? Or do we see something it doesn't? We don't know, but it worries us. Will there be no run-up in gold? Or will it come on sooner and more violently than even we ever imagined?
There's bound to be a surprise waiting for us somewhere; but, just to be on the safe side, we'll hang onto the gold we have. And we urge our dear readers to do the same. No gold? There's still time to pad your portfolio with our favorite yellow metal.