Gold as well as most other commodities have been held down for quite a long time by the bankers. The world wide economic system is based on paper and the Central Bankers will lose power when commodities begin to rise. If the system is driven by paper and credit, it would not be in interest of the bankers to have the public buying up tangible assets.

Gold and the rest of the precious metals have become the only real safe investment. I believe the current gold price is not anywhere near the price it should be at based on inflation.

The following is an excellent article on how gold has decoupled from the US Dollar…. http://www.goldnewswire.net/gold-disconnects#gold-price

http://globaleconomicanalysis.blogspot.com/

http://www.google.com/search?q=fractional+reserve+banking&domains=http%3A%2F%2Fglobaleconomicanalysis.blogspot.com%2F&sitesearch=http%3A%2F%2Fglobaleconomicanalysis.blogspot.com%2F

sometimes, they forget how to utilize the i-net, while it’s still here..

Why should this suddenly change? It seems kind of silly to argue with graphs that actually contradict your point very clearly…

Sirs,

this is fine, thoughtful, and thought-provoking piece. to that end, well done.

with this, though:

We should note here, however, that speculative bubbles are not necessarily a direct result of paper reserve banking systems. Indeed, bubbles have also occurred with some frequency under various gold standards. Speculative bubbles are most typically a function of leverage, which takes its cue from aggressive lending practices (when uncollateralized paper loan claims dwarf the pool of reserves of the system). These conditions clearly characterized financial activity in the 1920s and, until recently, the global financial system of the last 10 to 12 years.

this: “speculative bubbles are not necessarily a direct result of paper reserve banking systems. Indeed, bubbles have also occurred with some frequency under various gold standards.”
though, as you go on to explain, bubbles/manias can only be fueled by the “function of leverage, which takes its cue from aggressive lending practices (when uncollateralized paper loan claims dwarf the pool of reserves of the system). ”

I point this out, because it is unnecessary, and weakens an, otherwise, excellent piece, thereby, to mention: “bubbles have also occurred with some frequency under various gold standards.” Even though, factually, you are correct.

The rub of it is: “Fractional-Reserve” Banking, at its Core, and the, further, elasticity of the bounds placed thereon, that is the Problem.

IOW, even Nerf knows to make its Squares, for Carpenters-to-be, out of Hard Plastic. If only our Monetary Masters were so benevolent..