In case you've been under a rock for the past 24 hours, the buyers just won the "battle for $1,000 gold."During yesterday's trading, gold reached $1,043 ounce... which surpasses its March 2008 high. So what's really driving this breakout? Once again, we remind you, "There ain't no such thing as a free lunch."
You see, to pay for all sorts of bailouts, wars, stimulus packages, cash for clunkers, and welfare programs, governments have to borrow lots of money. They even create a little out of thin air to help foot the bill. When they do this, they dilute the value of their paper currencies. Gold, a sort of "anti-currency," is where smart investors flock when this government stupidity gets a little too stupid.
Is gold too popular right now? Probably. But governments know that promising "bailouts for everyone" is how to get elected and stay elected. And as old man gold and his new high reminds us, there just ain't no such thing as a free lunch. Long-term, gold is headed higher.
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