In the end it was the age old relationship that did it: gold’s inverse relation to the dollar.
With the dollar weakening on uncertain economic news and a surprise squeeze on oil production, gold was able at last to make it up to and over the US$2,000 an ounce summit, and to survey the territory beyond.
In the lead up to Easter, gold is at an all-time high of US$2,023 per ounce, a level that was surely only a twinkle in a modern monetary theorist’s eye just a few pre-pandemic years ago, and which must look like the miracle of the immaculate conception to anyone who remembers the pre-Nixon gold standard era.
There was a time when gold was so important to the US economy the President Roosevelt essentially nationalised it.
Now, in terms of its overall financial heft, it’s far less significant.
If gold does end up being sequestered by any governments due to its rocketing value, that’ll just be a straight up case of state-sponsored theft, rather than any measure that’s justifiable on monetary, or even fiscal terms.
But where do we go from here?
Are there higher peaks in this newly opened-up mountain range?
Unfortunately, the fog of the future continues to obscure the vista ahead, but it wouldn’t be surprising.
There’s a degree in the short-term at least, at which US$2,000 gold represented the psychological barrier that couldn’t be breached.
Now it has been, the hesitant money can feel comfortable flowing back and forth around that level.
To put it another way, an old and ancient taboo has been broken.
We can now trade gold as high as we want to. The gold bugs who were dismissed as cranks – or to use the modern parlance, as conspiracy theorists - for predicting US$2,000 gold ten or fifteen years ago have now been vindicated.
Who will now refute the possibility of US$3,000 gold?
After all, what is a dollar these days?
The Saudis are being reconciled to Iran by China.
The Chinese currency has replaced the US dollar as the most widely used medium of exchange inside Russia.
The Malaysian leader has questioned the necessity of using the US dollar in the years ahead. And in the background sit the truculent left-wing South American countries who have always resented US dollar hegemony.
For now, as hard currency, the dollar still remains unmatched.
But, it is at least now possible, as with US$2,000 and US$3,000 gold, to imagine a world where that US dollar hegemony is challenged.
If it is, the gold price will go through the roof. At least in dollar terms.
But the rub will be, of course, that by then the key currency in which gold is valued won’t be the dollar any more. It’ll be the Yuan or the Rupee or the Yen or the Rial.
And if that’s the case, US$3,000 might not be half as momentous in the future as US$2,000 is now.