Rodney

While I basically agree, the common wisdom among financial wizards of the '90s and early '00s was that gold was a 'has-been,' and no longer had credibility as a currency. They referred to the pretty low gold pricing through the '90s as their proof. And most people believed this. What the wise heads didn't say was that central banks were dumping much or most of their gold reserves through that period (and up until recently), helping in large part to keep the price low as stocks and real estate and other investments climbed. As to why they were doing this -- well, you can get a lot of conspiracy theories. I wouldn't say.

Now we're having a reaction to the gold and monetary policy of the '90s. Some people aren't so sure of the dollar or _any_ of the major currencies as they have been, due to a continuing oversupply of currency and debt and a growing undersupply of commodities that can be bought. This has led to increasing commodity prices (oil, sure, but also copper and other metals), and also to an increase in the price of gold because 1) it is a valued commodity of limited supply, 2) it is a form of money that cannot be produced at will in arbitrary amounts (difficult to cheapen), and 3)the low prices fostered for years by central bank sales discouraged investment in new exploration and development. Which means that given a healthy demand for gold, production may not keep up with demand for years, if ever.

I guess I'm saying, yes, gold has always been a currency. But for a while there, people were bluffed into believing that it wasn't, any longer. Some of us are questioning the bluff, especially as the supply of paper-based money and debt grows higher and higher but the actual real wealth being created by most industrial countries does not increase.