COTW: Gold is Back, the $ NOT!

After hitting a low of $1180 an ounce at the end of June, physical gold is surging back 12% to over $1300 in less than a month. Demand for physical gold as opposed to "paper gold" or shares of gold ETF is so strong that some observers are seeing a run on the highly leveraged bullion banking system. Experts think the COMEX may have to alter its terms of settlement within 90 days:

Gold futures have been in backwardization for several months indicating a continued robust demand for physical gold mostly from Asia and a weakening of the US dollar. Gold has become the alternative to holding dollar financial assets based on an economy that does not inspire confidence. Why this is so is explained in these charts:

As the US piles up debt, the effect it has on the economy continues to shrink.  The marginal productivity of federal debt in the economy has reached zero. You might ask, who is really paying for all the cheap money being lavished on the banks by the Fed (ZIRP)? The answer is, ordinary savers to the tune of $10.3 trillion [orange area] in lost interest personal income:

credit: ZeroHedge.com