The Fundamental Difference

The Fundamental Difference: "There is a factor that makes this gold/silver bull different from the '71 - '81 bull. The difference is very fundamental.
As the price of gold started to rise in the early '70's so gradually, very gradually just like now, people started to become aware of the rise and 'came aboard'. Gradually gold increased in value leading to ever more people investing in the market.
As more and more people started investing in the gold market they at the same time became more and more educated to the fact that the US$ was 'out of whack' and that this was why the price of gold was going up. Awareness increased of the fact that the fall in the US$ value and the rise in the gold price were not independent of each other. As more and more people became aware of the US$ weakness, so the cost of gold in US$ terms was driven ever upwards.
The price of gold has always been the financial equivalent of the canary in the coal-mine. It flags in no uncertain terms the health of any currency that it is measured in. At the moment the canary is singing badly out of tune with Ben Bernanke the new head of the Federal Reserve, who claims that the US economy is on sound footing and that it is full steam ahead.
In the late '70's those in charge of the US$ were pressured by the surging gold market to do something about the perilous state of the US$. Under then new Fed Reserve head Volcker they did. Using unprecedentedly high interest rates the US$ was eventually brought back under control, and the need for gold started to dwindle as the subsequent almost 20-year bear market in gold witnesses.
In 2006 we have the same problem. The gold bull is now almost six years old and more people are becoming aware that it is something wrong with the US$ that is causing the price of gold to surge. Once again we need the Federal Reserve to correct t"