Gold continues its push towards $3,000 per ounce. Has it risen too far, too fast?
One year ago, an ounce of gold could be bought for about $2,000 per ounce. Since then, the price of an ounce of gold has increased about 46 percent.
But is gold really 46 percent more valuable than it was just one year ago?
Gold’s price increase, in dollar terms, is more of an indication of the dollar’s loss of value than some newly discovered worth in the utility of gold.
Remember, the dollar has been used and abused by the U.S. government for many decades. It has been continuously overissued in the form of credit. Now claims on future productivity have piled up in the form of a $36.4 trillion national debt.
As a practical matter, there’s no way the U.S. government – and the American taxpayer – can ever pay back all the debt that is owed. The only two ways to renege on these obligations are by an overt default on debt payments or by the continued devaluation of the dollar. Continue reading