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Why is gold advancing without the public’s awareness?

*Dow Theory Letters, by Richard Russell, January 28, 2008

“The yellow metal has, after 28 years, marched into record high territory above 900. The still-ignored one-ounce gold coins are now selling in the vicinity of $960 a copy. And the question that every ‘real money’ advocate asks is — ‘What next for gold?’ Of course, they might better be asking, ‘Which way is the dollar going?’ Or even more to the point, ‘Which way is fiat paper money going?’

As far as the dollar is concerned, it’s already clear that the Fed will sacrifice the dollar on the alter of ‘no recession.’ The excuse is that there’s no real inflation to worry about, and, of course, the Feds are referring to their phony gauges of price inflation. Those of us who live in the real world know that the Fed itself is creating the monetary inflation which will, in time, lead to increased price inflation. Actually, with the dollar still heading south we’re seeing plenty of price inflation now (have you been to your local grocery store lately?).

The US is now in the position where bad news in the economy will spur an increase in fiat money creation. That means more dollars in relation to a relatively fixed amount of gold. The result, logically, is that gold will move higher in terms of paper dollars. Which is exactly the phenomenon that we are now seeing.

Obviously, that is much too simple an explanation. I happen to see the picture a bit differently. I see rising gold as real money pulling away from a world of paper money. We’re nearing the point where investors around the world are beginning to distrust the whole universe of fiat money. Gold rising to new record highs marks the beginning of that global distrust. The US public is still in the dark. Most people in the US have never even seen a gold coin. That will change. We’re at the beginning of the era where gold will be entering the US public’s consciousness.”

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.