In January 1980 gold bullion posted its inflation-adjusted record high at $2,290.If the U.S. dollar were back on the gold standard, notes Société Générale analyst Dylan Grice, then gold would have to be priced at $7,648 an ounce in order to fully back all of the dollars in circulation.
That calculation is based on the U.S. monetary base of nearly $2 trillion and U.S. government gold holdings of 261.5 million ounces.
"You are basically short trust in government when you buy gold," says Mr. Grice, who suggests gold may be in the early stages of a long-lasting speculative mania. "Gold goes higher until policy makers get ahead of their problems."
WSJ.com - Ahead of The Tape - Mark Gongloff - November 20, 2009
JGH: Obviously, this doesn't mean that gold is going to make a run at $7,000 an ounce any time soon. But it does mean that gold has plenty of room to move higher and is not necessarily overvalued at over $1,150 an ounce.
Health Care Reform Update:
According to the Americans for Tax Reform, the Senate's 2,047-page health care bill uses the word "tax" no fewer than 183 times, taxable 164 times, "taxes" 17 times, "fee" 152 times and "penalty" 115 times.
And this is heath care "reform" that's supposed to lower costs? How? By taxing the health care consumer to death?
Doesn't it strain credulity to believe that Congress is going to give 30 million additional people health coverage, cut the deficit, improve health care quality, increase access and reduce costs with government taxes, fees, penalties and mandates?
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