I heart Telegraph.co.uk

With precious metals taking a drubbing today and looking ready to conclude their first major corrective week since August (it's been quite a run), this image atop the business section of the The Daily Telegraph website should remind everyone that $800 gold is just the beginning and that they really should read this British daily from time to time.
If there's been a more bullish lead story about the metal in any big U.S. paper, it hasn't crossed my computer screen, though this LA Times story by Tom Petruno earlier this week gets an honorable mention: Gold shines as many see lackluster economy.

Always on the lookout for changes to the public's perception of the yellow metal as an investment class and cognizant of the mainstream media's role in shaping that perception, a story like the one behind the gold bars above is a critical development.

With the appearance of the phrase "peak gold" in the opening paragraph and a picture of Venezueala's Hugo Chavez to follow, it seems that, at least in the U.K., perceptions may be changing quickly (yes, of course, this was written by Ambrose Evans-Pritchard).

The era of 'peak gold' has arrived. Try as they might, miners cannot find enough ore at viable costs to replace their fast-depleting reserves, even if they dig miles into the centre of the earth.

"There's not much gold out there," said Gregory Wilkins, chief executive of top producer Barrick Gold. "Global mine supply is going to decrease at a much faster rate than people generally believe."
...
Gold reached a 27-year high of $846 an ounce in early November following rate cuts by the US Federal Reserve, though it has fallen back on profit taking. Investors seem to be betting on a "Bernanke reflation", suspecting that the Fed will turn the liquidity tap back on to cushion the US property slump.

Tony Fell, chairman of RBC Capital Markets, said the world money supply has been growing by 5pc-10pc while the stock of mined gold has been rising at 1.6pc, creating a mismatch that must be covered.

Mr Fell says the total debt burden in the US has exploded to 340pc of GDP, in stark contrast to the steady levels of around 150pc of the post-War era. It almost insures further dollar debasement. "We're in the very early phases of a prolonged bull market," he said.
...
Whether the gold mining shares will at last join the party is far from clear. Many have languished through the bull market, and some are trading well below levels reached when gold was half the price.

Costs are rising at $60 an ounce annually. They will average $460 by next year. From tires, to diesel fuel, and the geologists' salaries, mine inflation is running at 15pc.

As mentioned here a few times previously, if the central bankers of the world really want to keep the gold price contained, they ought to stop emptying their vaults of bullion and figure out a way to get energy and other commodity prices down so that the business of mining becomes profitable - then mining companies will start digging the stuff out of the ground at a faster rate.

Until then, gold will probably just continue to rise with other commodity prices at between 15 and 25 percent per year, making paper money look like a poor bet in comparison.