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"It seems highly likely that a new up-leg in the bull market for gold prices is now underway," one true bullion believer says

Was that it for gold? Assorted gold bugs, and others, think not.

On Friday the metal closed at an all-time record high ($1,474.60 on the CME June contract). So did Arca Gold Bugs, after finally getting above the previous record of December last year earlier in the week.

As the chartist Martin Pring said with characteristic understatement in his Weekly Infomovie report: "It seems highly likely that a new up-leg in the bull market for gold prices is now underway."

Or, in the more direct language of the Jesse's Cafe Americain website: "Gold and silver both broke out cleanly today and nailed the bullion bears' hides to the shed."

But then, as so often with seeming gold breakouts, things got difficult. At one point on Tuesday, June gold was down 2% from Friday ($29.60) -- although at Wednesday's close the loss had moderated to $19.

No respite for gold shares though: As measured by the HUI, they closed Wednesday down 4.62% on the week -- and back below the December high.

But gold drew in support from more observers than just its hard-core friends. For example, on the initial slide on Monday, The Gartman Letter added to its gold position (hedged into sterling in this case) and on Wednesday it was talking about buying more.

Many of gold's hard core denigrate Dennis Gartman, who has a history of abrasive remarks about them -- but others concede he has a reasonable record as a buyer of the metal. Also on Wednesday, the consultancy Gold Field Mineral Services, itself regarded with skepticism by the true believers, suggested in its "Gold 2011" survey that the price of $1,600 will be seen this year. By GFMS standards, this is a bold call. It may well comfort the conventionally minded institutions said to be nosing around gold now.

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"Today, of course, it is worth barely more than 1,500th of an ounce of gold," New York Sun editor Seth Lipsky notes

The most astounding feature of the political fray as the 2012 election comes into view is that not a single Republican other than Congressman Ron Paul is stepping forward to brand as his or her own the issue of honest money. The whole party is into the negotiation with the president over the budget, and the underlying issue -- the failure of our fiat currency -- is up for grabs.

It is true that there's plenty of blame to go around on the dollar. It had a value of 265th of an ounce of gold on the day that George W. Bush acceded to the presidency and was worth less than an 853rd of an ounce of gold on the day he left office. The New York Sun, which supported Mr. Bush in 2000 and 2004 elections, issued in December of 2005 an editorial called "The Bush Dollar," warning of the collapse of the greenback. It had just sunk below a 500th of an ounce of gold.

Today, of course, it is worth barely more than 1,500th of an ounce of gold. The giddiness of the plunge of the dollar really started to be felt in the years after the Democrats acceded to the leadership of the House. At the time the Sun called for renaming the dollar "The Pelosi." The collapse has been so dramatic that the Europeans, the United Nations and even the Chinese communists are talking about the need to create a new international reserve currency. Yet not a single Republican has stepped onto the national stage and declared a run for the presidency on a platform containing the strong dollar as a major plank.

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Firm cites economic challenges in Europe, increasing global inflation, and potential economic fallout from the Japanese earthquake

In an industry economic and ratings outlook released Tuesday, Standard & Poor's forecast that most U.S. and Canadian metals and mining companies will improve their operating performance in the first half of this year, "reflecting a rise in average prices and strengthened end-market demand."

S&P primary credit analyst Marie Shmaruk and senior economist Beth Ann Bovino also noted that prices of the yellow metal -- in response to global political uncertainties and fears of inflation -- have remained high, averaging nearly $1,400 per ounce, year to date. "We expect gold prices to remain high in the next year or so because of economic challenges in Europe, increasing global inflation, and a potential economic fallout resulting from the earthquake in Japan," they forecast.

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"True, gold doesn't earn any interest, but neither does money in the bank these days, and gold can't be devalued away by reckless monetary policy"

The US is on a fiscally unsustainable path and has almost entirely wasted the opportunity the crisis represented to get its house in order.

Obama, and whoever sits in the oval office next, has an enormously difficult task of explaining to ordinary people why the belt tightening that is to come applies to them and not to the banks that created the mess and are feverishly handing out record bonuses as a result.

Given this constraint, and the general paralysis of logic that now grips DC, we can almost certainly expect that the resolution to the multi-decade game of kick-the-can will be a crisis of sorts. The IMF has weighed in with its very measured and dry, if not boring, recitation of the risks involved.

I admit to some affinity to their assessment, at the risk of letting my guard down, because they have finally conformed to the views I have been writing about for years. Debt-based money is in a bind. It's damned if we do and damned if we don't.

The only way out is to accept the idea that living standards have to fall to match the prior excesses, an admission that 'experts' agree is politically impossible in the US at this time.

Yet the conditions and risks remain, regardless of what experts think is doable.

The job of any primary bear market, and we are in the mother of them all, is to destroy wealth.

Your job is to preserve wealth. But buckle up, it's going to be a rough ride.  

My overall advice for what's to come remains: convert your fiat money to useful things. True, gold doesn't earn any interest, but neither does money in the bank these days, and gold can't be devalued away by reckless monetary policy. So holding precious metals for purchasing power preservation should be a fundamental part of your plans. And while there is real risk of a short-term deflationary downdraft in commodities as the Fed jawbones about ending quantitative easing, my general advice is anything that you expect to buy over the next year you should just buy now. What the heck, you'll use it anyways and you just might buy it for a lot cheaper than later on.

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"In my mind it will resolve them necessarily by undertaking the step of restoring the dollar to convertibility into gold," he tells King World News

Bond legend Jim Grant tells King World News there's only one way out of America's debt hole: "Well, in my mind it will resolve them necessarily by undertaking the step of restoring the dollar to convertibility into gold."

Grant has been calling for Federal Reserve chief Ben Bernanke's resignation for months. He says the debasement of fiat currency will continue and this will drive a gold rally.

"To me the gold price takes the form of a very uncomplicated formula, and all you have to do is divide one by 'n.' And 'n', I'm glad you ask, 'n' is the world's trust in the institution of paper money and in the capacity of people like Ben Bernanke to manage it. So the smaller 'n', the bigger the price. One divided by a receding number is the definition of a bull market. ...

"You'll notice that this had nothing to do with security analysis. This is conceptualizing, brainstorming, nothing to do with price/earnings ratios, other valuation methods like cash flows. It is a proposition or a hypothesis on what is driving the gold market. So the gold market is necessarily a speculative piece of business. It's not to be confused with the kind of investment that Ben Graham wrote about. Anyway, I happen to be bullish on it, but not for reasons that I can readily defend before a member of the fraternity of chartered financial analysts."

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