Gold is currently nearly $820/oz. and it's natural to look at the historical charts to see where this puts us. We did this yesterday.
But what use are the charts? The wiggly lines on them don't show the full context: the wild monetary inflation and cumulative trade and budget deficits of the past few years, which (if we believe the analysts) are unprecedented.
Instead of drawing conclusions from the graphs, we should be asking questions - especially, why hasn't gold zoomed more and earlier? After all, governments must feel that gold is at least a vestigial or potential measure of the worth of their currency; otherwise, they wouldn't be storing thousands of tons of the unproductive stuff in expensive facilities. So, why hasn't gold acted as the thermometer of this financial fever of the last, oh, seven years?
One answer is that the world gold market is small enough to be deliberately distorted. Frank Veneroso could be right: central banks may have been secretly drip-releasing portions of their bullion reserves. That would be to reassure us - or rather, kid us - that everything's under control. Since the gold price matters, it becomes important for officials to manipulate it, and so (according to this theory) the charts will actually tell us nothing.
Until the reserves get so low that the game can't continue. Central banks will suddenly get vertigo and freeze-cling to what they have left, and the gold market will explode, as confidence in the currency starts to collapse.
And Veneroso cottoned on early, simply because the scam worked too well. The smile was too bright, the walk a little too confident. If he's right - and I more than half suspect he is - we needn't bother with the past price data, or with worries about short-term corrections.