Why Gold Hit U.S. $1,556 An Ounce, A New Record

On Friday, 4/29 gold hit a new high at $1,556 up $25.20. It happened because many of those who can afford to buy gold see the U.S. dollar continue to lose its value and they are seeking a hedge. They are acting out of fear and their fears are well founded.

In recent years as the dollar has been falling, the pricing trend for gold has been up, up, up. This year to date, the dollar has lost 8% of its value against a basket of other major currencies such as the yen and the euro, despite Japan and the Euro Zone facing huge problems.

But the U.S. economy is shaky, the U.S. Fed is pumping out massive quantities of cheap dollars and U.S. interest rates are near zero, which encourages investors to place their money elsewhere to get a better rate of return and to feel more secure. This has driven up the price of gold, silver, copper, cotton and food and oil and other commodities.

Could the dollar reverse its direction and rise sharply, regaining much of its old stature and triggering a gold sell-off? Yes, if the government ended its wars, dramatically slashed its spending and raised interest rates. Investor confidence would jump, they would get a higher rate of return on their money and they would buy dollars instead of selling them. But what do you think the odds are of the government getting a grip on its problems any time soon and correcting them? Approaching zero?

If you are an American and find this discouraging, do something about it! Raise your voice! Put pressure on your government to operate responsibly with your money and if they do, gold and other commodities spiraling upward against the dollar and against your paycheck and your life savings could become a thing of the past.

Dick