by James Orlin Grabbe, In Gold We Trust:

The price of gold is rising, but is this purely because of the tensions in the Ukraine? Not entirely, I think it adds fuel to a supply shortage created by enormous Chinese physical demand since April 2013. While paper sentiment might change today or tomorrow, the physical reality will eventually be the main driver to push the pice upwards.

Throughout history gold has always been the most constant form of money. In 1900 you could buy roughly the same amount of breads with one gram of gold as two thousand years ago. There has been no other currency that is equally constant. But the value of gold has been in for a ride since 1971, when Nixon ended the gold exchange standard in order to maximize the national benefit of issuing the world reserve currency for the US. US’ policy was to remove gold from the international monetary system, from that moment the international monetary system was debt based. To make believe the dollar was stronger than gold in the foreign exchange markets the price of gold had to be suppressed. Controlling CPI would do the rest.

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