About this time last year, I commented the price of gold should be about $686.00, based on the massive liquidity globally. However, gold's price has mostly stayed below $450.00. I attributed this to the fact that most well heeled investors had faith in the global dual fiat monetary reserve system. It works this way: if you fear dollar weakness, you move to the euro, or vice versa. Gold was to be left out of the equation.

No one asked what happens if investors lose faith in both the dollar and the euro.

Today, gold moved to a recovery high ($486.10, New York spot gold). Evidently, Europeans are now starting to lose faith in both fiat currencies. Germans can't decide if they want to keep their workers' paradise operating along with its continued slow growth economy or to vote for leadership that will cut back on workers' subsidies and entitlements.

France is dealing with extreme social unrest, unable to control its Muslim/Islamic population. Spain and the United Kingdom have been bombed by terrorists and Italy recently uncovered a terrorist cell said to be ready to bomb a target in or around Naples.

China has made it easy for its citizens to own gold and India's citizens have never lost faith in the value of gold. No wonder the yellow metal has climbed to new highs!

The danger is that the fiat monetary systems in G7 nations cannot survive if too many people move to gold. Therefore, G7 central banks will do what is necessary to push gold's price down whenever they can.

In my opinion, gold options could be a big gamble. Physical gold and gold mining shares are a safer buy.