The gold market got a nudge this week as it broke $1500 an ounce.

April 25, 2011 – The gold market got a nudge this week as it broke $1500 an ounce – widely considered to have been a strong psychological barrier. But oddly enough, “activity in the physical market is all but stopped due to the record prices,” says Tatyana Shumsky of the Wall Street Journal. That spells opportunity.

When you think about it, the extraordinarily light trade in gold this week is all that prevented the price from shattering that barrier. The real news is that the world is beginning to take a more realistic look at the dollar.

“The landscape looks ugly, with the greenback vulnerable to further setbacks,” said the Wall Street Journal’s Andrew J. Johnson. The “ICE Dollar Index … continued Thursday to plumb its lowest levels since the financial crisis of 2008.” Global foreign-exchange strategist Andrew Busch notes “the widespread perception is that the Fed’s stimulus strategy … is to blame for the dollar’s battered state, with further missteps sure to send the dollar spiraling.”

It is just the beginning. “The euro, New Zealand dollar and Canadian dollar all hit multiyear highs against the dollar early … while the Australian dollar and Swiss franc climbed to new records.”

The S&P outlook downgrade wasn’t news, but it did crack the shell of global denial about the state of our economy. Investors are beginning to take a closer look at the real conditions here and it won’t take much to convince them that the Fed has been trying to pull the wool over their eyes all along.

Take the big one, for example. Bernanke’s story – and he’s sticking to it – is that our debt stands at a very manageable 70% of GDP. “But it’s a con,” says Brett Arends in MarketWatch. When you add in debt to the Social Security Administration gross federal debt is actually at the 100% of GDP tipping point. And that doesn’t include future Medicare obligations. Moreover, the Fed’s own statistics puts the total debt of domestic nonfinancial sectors – the real “national debt” – at more than double the GDP.

The bottom line is that the Fed’s words do not hold up under scrutiny, and that will drive big money away from the greenback and into gold. When the physical gold market heats up, today’s record prices for gold coins will prove to be a real bargain.

Kevin Johnson

Senior Staff Writer – GoldCoin.net