When Does Gold Finally Correct?

On a long enough timeline, when central bankers print infinite amounts of fiat currency, gold is bound to go up. But the recent action has everyone wondering when the yellow metal will actually correct and take a breather, and by how much. In hyperinflationary periods, it never does. Gold just keeps going up relative to fiat paper until, relative to gold, the money becomes worthless. Is that the point we’re arriving at?

A currency crisis is hardly out of the question. No fiat currency lasts forever, and since Nixon took us off the gold standard in 1971, we’re well over five decades in. But even if the gears of global finance can continue kicking the can down the road, a blow-off top in gold doesn’t mean that we’re entering a secular bear market, or that the inevitable decline of fiat has been stopped.

It might merely mean that the slow-motion collapse of the dollar is taking a temporary breather after drastically accelerating earlier this year. With the weekend gold “correction” still holding above $4,000, even with a drop below that level, the message would remain loud and clear: 

We are in a new era of price discovery for the most important instrument for financial and economic protection that has ever existed; a 5,000-year journey nearly as old as human commerce itself. As pundits keep calling the top and scratch their heads as to why gold is above $4,000 at all, the yellow metal continues to defy them, frustrating short-term speculators and technical traders looking for a clean, decisive reversal, and making fools of Keynesian careerists.