pater_tenebrarum

Gold Economics Questionable; Facts Forecast Lower Prices

'I remain skeptical that the amount of currency in the system is actually increasing, since the velocity of money has fallen so precipitously.'

this sentence makes no sense whatsoever. the velocity of money is not an independent causative variable at all for one thing (it is merely a lagging symptom of the thrust of monetary policy at an earlier time), and the supply of money is increasing by leaps and bounds currently - which has nothing to do with velocity. it may have escaped your notice, but the monetary base has increased by 100% over the past year, while broader monetary aggregates are currently all growing at double digit annualized rates.
we can rest reasonably assured that Mr. Bernanke will keep it that way.
as an additional point, the prospect of the current money supply inflation resulting in higher prices down the road is not the only thing motivating buyers of gold.
the possibility of a wholesale collapse of the monetary system must be considered as well.
just look what became of the 'well contained' little problem of subprime mortgages. recent actions by the authorities, including the Fed's announcement of accelerated monetization of debt, all reek of increasing desperation. there can be no assurance the current system will survive, hence people buy gold.