Let me point out a few things here. Look at where the trend begins, just after Bush was inaugurated. To be even more accurate, it began when the previous top was exceeded, and when the previous low was higher. The higher low was just after the inauguration in 2001; when the higher high took place was early in 2003. It so happens that Fed policy became very accomodative at that exact moment in time. Just a coincidence? I think not.
What I get out of this is that the 911 event has put a strain on our finances and that the Fed and the government is financing it by inflationary policies. The war in Iraq began in March 2003. By that time, gold was not in a big uptrend yet. It broke above 500 in 2006. Guess what happened that year? The Democrats came into power in Congress. Actually, they won the election and took power the next year. The war in Iraq had been dragging on and the government was losing control. By the time 2008 was rolling around, the price of gold was clearly reaching historical heights.
Democrats couldn't force us out of Iraq, and were favorably inclined to spend more. No control over spending, neither for domestic spending nor for the war spending.
Recession occurred and the only response that the government had was to increase its spending even more. But that's what got us into this mess in the first place. Turning to bigger government is like drinking from the same well that is making us sick. Time to stop drinking from that well before they poison us all with national bankruptcy.
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