Well, maybe the word "forget" is the wrong word to use here since, more so than at any other time in history, the direction of the gold price has been driven by expectations about whether the Federal Reserve will launch a new round of money printing or not, however, investors seem to have already forgotten that the Fed was largely out of the picture when the gold price rose to a record high late last summer.
It was fractious debt ceiling debate and downgrade of U.S. credit that sent the trade weighted dollar sharply lower along with domestic equity markets while the yellow metal was soaring toward the $2,000 mark as shown below and this sort of thing could happen again this year.
Once the U.S. government had "kicked the can down the road" one more time, markets settled down, the dollar rose along with equity markets as the gold price plunged, investors regaining confidence in the world's reserve currency once again while eschewing what has served as a global currency for thousands of years.
Is there any reason to think that, with the fiscal choices staring policy makers down later this year now even more extreme, elected officials will do any better this time around?
Whatever they decide to do, it is likely to be positive for the gold price.
If, as most suspect, a lame-duck Congress again forestalls major decisions about taxes and spending by again extending all the programs that were extended last summer, this is likely to be negative for the dollar and positive for all risk assets, including gold.
Recall what happened the last time that a lame-duck Congress met in December of 2010 and agreed to spend nearly a trillion dollars more of borrowed money - the price of nearly everything soared in what some fondly look back upon as "a December to remember".
If elected officials dicker, much like they did last summer during the debt ceiling debate, look for the dollar to tumble and take U.S. stocks along with it while the price of gold soars. After some sort of an agreement is reached in the new Congress in 2013, financial markets will likely recover and the gold price will plummet, but who knows how high it might have climbed by then.
An extreme outlier possibility would be for Congress to enact credible long-term reforms while, at the same time, providing near-term stimulus via an extension to the existing programs, however, given their track record since that was attempted about a year ago, it's not clear that this is possible.
Additional disclosure: I also own gold and silver coins and bars