Gold hit a new all time high today of $1,044 per ounce and it looks like this break out above $1,000 could be permanent. While this may be a new all time high in nominal terms, adjusted for inflation gold's high in 1980 of $850 equates to $2,300 per ounce in today's dollars. We believe the inflationary crisis we are rapidly approaching will be much worse than the inflation of the 1970's. Therefore, $2,300 per ounce gold could be here sooner than anybody thinks is possible.There are news reports today that Saudi states are meeting with countries like China and Japan in order to end dollar-based oil transactions and begin transacting oil using a new basket of currencies. It is the U.S. dollar's status as the world's reserve currency and the fact that foreign nations are forced to trade oil and other commodities in U.S. dollars, that has kept the U.S. economy propped up until now.
Up until today, foreign countries have been forced to hold huge U.S. dollar reserves which has allowed the U.S. to sell an increasing supply of U.S. Treasuries and thereby export its inflation to the rest of the world. Soon, foreign countries will no longer have a reason to hold U.S. dollars and there will be no interest in buying our debt. Almost all of the U.S. government's deficit spending will have to be paid for by outright money printing by the Federal Reserve.
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