Dollar outlook isn’t golden

“Buy gold,” we are told by no less an authority than G. Gordon Liddy. “It’s value has never gone to zero,” says an official once in charge of America’s gold hoard, including the bars stored in Fort Knox.

Why investors should find that reassuring is not obvious, but never mind. They have bid the price steadily up past the $1,100 per ounce mark, from around $270 at the beginning of the decade and around $700 when the current crisis in financial markets hit the value of stocks and property.

And a very rich and very shrewd investor is telling friends that he expects the current price to more than double in the next five years.

It seems that investors, or at least many of them, have decided that the Obama administration and the Bernanke Federal Reserve are combining to depreciate the dollar, the former willingly to encourage exports, the latter warily.

Talk of the devaluing of other nations’ paper currencies at one time produced a flight to the dollar, deemed safe from the depredations of rulers trying to shore up their struggling economies by printing money.

Examiner columnist Irwin M. Stelzer is a senior fellow and director of the Hudson Institute’s Center for Economic Policy Studies.

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