Please note this number carefully: $US 873.20. You can see it on this $US 5 x 5 Gold point and figure chart. Please note that this chart is based on spot future CLOSING prices:
(Chart appears here in original analysis)
In $US terms, there are two big numbers for Gold. The first is the well known spot close of $US 850.00 reached on January 21, 1980. The second is the not so well known spot FUTURE close of $US 873.20 reached on that same day, January 21, 1980. Over this past week, Gold has already closed above that January 1980 all time high on a spot basis. It has not, quite, closed above its January 1980 high on a spot FUTURE basis. The high so far for Gold on that basis is $US 869.10 - its closing level on January 3, 2008. Gold has one more "hurdle" to surmount before it can REALLY be said to be in all time high territory in US Dollar terms.
Why is Gold at all time highs in terms of the US Dollar so crucially important? There are two simple reasons. The first is Gold's history as MONEY. The LAST "modern" paper currency which had any official tie to Gold was the US Dollar. Up until August 15, 1971, it was still possible to "redeem" US Dollars with Gold. It is true that only other governments and central banks could do this. It is equally true that no individual American could do it. Gold ownership in the US was ILLEGAL between 1933 and 1975. BUT, the US Dollar was still the only currency redeemable in GOLD on demand. This was the arrangement under which it had become the world's RESERVE currency in 1944.
The US Dollar retained its global reserve currency status after August 15, 1971, but it was no longer redeemable in Gold. It had become a mere piece of paper, redeemable in NOTHING. It retained its status as money because it was illegal to use anything else as money in the US. It retained its global reserve currency status because the US was the most powerful nation - economically and militarily - in the world. No other nation's government had either the temerity or, truth be told, the desire to return to any type of "Gold standard". And to this day, none have.
The other reason is simply psychological. Since long before 1971, there has been a global push by governments and central bankers led by those in the US to "debunk" Gold's status as MONEY. They could not and cannot have this status realised and continue to finance their ever increasing grab for political power. For that they need a fiat money system in which they can create any and all amounts of money they need to perpetuate themselves. Gold does not allow this, therefore Gold had to be discredited.
As you probably know, 2007 was the SEVENTH year in a row during which Gold rose in $US terms. Now, as we enter 2008, Gold is right on the verge of rising to a new ALL TIME HIGH in US Dollar terms. This, for those in charge of the modern paper fiat money system, is deadly dangerous. Even though Gold has been going up for seven years, the vast majority of Americans (and most other people worldwide) have paid no attention to it at all. They are still paying no attention to it at all. But at SOME price above the highest point Gold reached in 1980, that is going to start to change. And once it starts to change, it is going to be impossible for the monetary powers that be to put Gold back in the "bottle" it has been in ever since 1980.
Finally, the global fiat money system supported by nothing but debt and therefore the future production of private citizens was a system that, by the nature of economics and money, could NOT last. It is startling that it has lasted as long as it has. But the global lending freeze which is now deeply entrenched is an unavoidable signal that it cannot last much longer. So is the continuing weakness of the "reserve" currency, the US Dollar. So is the demonstrable inability of central banks to affect interest rates in the REAL markets. All these are signals, it is true, but all of them are being fiercely denied by those in control and beyond the understanding of most of those being controlled by the present system. A decisive new all time high for Gold in US Dollar terms will NOT be ignored. It will be noticed by everyone, even those who have no idea of WHY the Gold price is so high or WHAT that portends for the future.
It could happen any day. It will happen - SOON. Welcome to 2008. It promises to be a WATERSHED year.
We have extended the table below into 2008, even though Gold in all four currencies in the table is now well above its 2006 highs. Note that Gold did NOT achieve a new all time high this week in terms of Japanese Yen. The Yen is now rising strongly against the US Dollar, signalling a definite end to the Yen "carry trade". A big indicator of this is the fact that in percentage terms, Gold is now further above its 2006 highs in US Dollar terms than it is in Yen.
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