The euro was expected to provide united Europe something more than just a currency when it came online in July 2002. It was also expected to replace the need for citizens to own gold. Global investors would be given a choice with the establishment of the new reserve currency. The purpose was to insure that investors could move from a weak currency to a stronger one if either the U.S. dollar or euro greatly weakened.

It was taken for granted that either the euro or the dollar would provide strength. Gold, however, was not expected to fit into the equation. With gold at 17-year highs, investors have been forced to question if it will portend a much higher price in the next several years. If it does, it would mean the current fiat monetary system is not working the way it was intended. Furthermore, it would mean that both reserve currencies can be perceived as weak, and therefore gold would be considered more valuable.

There is another possibility. The sudden rise in the price of gold will not be ongoing; it is just a move upward toward gold's free market value that, for at least the past year, has been refused by central bank manipulation. If so, gold will move up to $475-$485, then become trapped in another higher level trading range due to further manipulation. If it turns out that the new fiat monetary system is essentially flawed, then global buyers will turn to gold as a store of value.

It may be possible for central banks to control the price of gold; however, they have had little success with crude oil, real estate, and most other commodities. And, as powerful as central banks are, Mother Nature is stronger. It could be that the need to spend $200 billion or more to rebuild the Gulf Coast was too great a contingency expenditure for the Federal Reserve to cope with for the short-term.

Hurricane Katrina has changed not only the perception of monetary value, but the reality as well. Now, for the first time in 17 years, the price of gold has moved above $460.

It is too soon to determine the Federal Reserve's reaction to this natural catastrophe. Will the Fed continue to fight rising prices with every resource at its command or will it allow the pressures of price inflation that have been held in check for the past two years to play catch-up?

Have the Fed and Euro lands lost control? The future price of gold, crude oil, real estate, and most other commodities depend on that outcome. I will write much more about this in the October issue of Kenneth Coleman's Investment Tracker newsletter. Gold stocks should move higher for the near-term. Stay tuned!