A ceiling or a floor

With the price of gold hovering in the $1,000 range it makes interested parties wonder if this is a ceiling for the metal, or is this the new floor? Last year the price of gold went thru 1000 (I think up to 1030) and then quickly dropped back down not long after. It is hard to say what will happen this time as there are so many factors involved.

The fundamentals of gold are, as they have been since Old Testament times solid. Gold is rare, beautiful and utilized as a preservation of wealth. It is universally accepted as money. You will find no country in the world (past or present) that will not accept it as payment for debt, goods or services.

In the following link you can see a chart that displays the enormous infusion of money the Fed has put into the U.S. financial system.

http://research.stlouisfed.org/fred2/series/AMBNS

I once read an illustration that gave me a great understanding of how a fiat money system works. The story goes like this. Imagine you live in a casino. Everything you earn, and all the goods and services you purchase are in the casino and thru their chips. So if you have $250 worth of chips you can purchase $250 worth of goods and services or you can put money in the market to see if you can earn even more. So your chips will be worth the same tomorrow as they are today right?..... Not if the casino has the right to produce all the chips they want. Operating real casinos must have cash to back up all their chips. But does the Fed operate on the same rules as it orders the infusion of money???? It is hard to say how they operate for sure.

The U.S. dollar has depreciated 96% since the United States went off the gold standard in 1913. When you look at the chart in the link you see a savage ascent. Doesn't Sir Isaac say that every reaction will be countered by an equal and opposite reaction? Or something like that.