Gold’s Rise Signifies America’s Fall

The price of gold has gone on a tear this summer, from slightly under $1,500 per ounce to well over $1,800 per ounce, and it looks like it wants to go higher. What gives?

Well, if you bought gold last spring, you’re looking pretty smart. And if you bought gold a decade ago at $300 per ounce, you’re looking like a whiz. Imagine buying a stock 10 years ago, having it appreciate fairly steadily over the decade, and then watching its price increase in less than two months by more than your original purchase price. For a commodity to increase at such a rate is truly extraordinary, even portentous.

For an investor, gold is an insurance policy, a way to preserve some purchasing power regardless of what happens to the official currency or a country’s banking system.

For a society, the rising price of gold is not a good thing. When investors flock to gold, it means they are not investing in wealth-creating enterprises. Money (which is what gold is once again becoming) is the oil that…