It all has to do with what you believe about the character of American politicians at every level – local, state, and federal, and about where we are headed fiscally. First understand that from 1776 to 1913 the US built some of the most solid financial credibility on the face of the earth due to the gold standard upon which its currency was based. Despite the various debasements between 1913 and 1980, we were still able to function reasonably because we had a positive trade balance and a near-zero national debt. But since 1980 we have been going hog-wild. Thirty years of expensive wars and an increasingly negative trade balance have left us paupers, although many still can't see it (the trappings of wealth can confuse observers for quite awhile).

So two things have happened. We have run out of real positive economic steam (i.e. positive trade balance) and there is no reason to expect recovery from this – ever. The other thing is that we've developed an electorate that has no concept of this problem, and which is hooked on more and more spending. If we were electing fiscally responsible people who were going to reverse our decline by cutting spending, then there would be a possibility of recovery. But that is the issue: it is politically impossible in the US to reduce spending. In fact, we can't even reduce the rate at which we increase spending. Actually, we can't even reduce the acceleration of the rate at which we increase spending.

These two factors together are leading us to demise. The only escape would be if we were to somehow elect a fiscally responsible government at every level. If this isn't going to happen, then we have only one future: escalating currency debasement forever.

As an illustration: I live in Illinois, which just raised its income tax from 3% to 5% in order to avert total fiscal meltdown in 2011. The observer must ask: will this solve our problems or will it make them worse? The naive person would presume that we will be better off because we will prevent further degradation of our bond rating and we'll have money to pay our bills this year. But the more astute observer will look at our history and realize what is really going to happen. I predict that Illinois will now use this increase to justify a 100% increase in state spending over the next ten years or so, leaving us even more broke in 2020 than we are today. It's basically inevitable. There is no controlling the appetite of the public sector. I assure you: absolutely all the money in this tax increase has been divvied up behind closed doors already.

So back to the price of gold: in order to imagine that its price will eventually drop, we'd have to presume that the US will put its financial house in order, i.e. that it will stop printing money. That would require no more bank bailouts, no more stimulus, and an actual reduction of spending at every government level in order to avert bailouts of the states and municipalities. Is that going to happen?

Nah.

What will the price of gas be in 2015? I'd say we'd be lucky to see it as little as $6 per gallon. What will the price of gold be? My guess is at least twice what it is today (which would be about $2800 per ounce). Not that it will buy you any more at the supermarket; merely it will have held its purchasing power. And with the dollars we'll be printing by 2015, $2800 will be cheap.

I've hesitated buying the Exchanged-Traded-Fund "SPDR Gold Trust (GLD)" because I've been told that the IRS taxes Americans annually on the gain (like a mutual fund does) even if you never sell GLD. Is this true?

Any suggestions about keeping up with hyperinflation in the future by buying Gold Bullion coins, like the American Eagle Gold coin or miscellaneous rare coins? I haven't bought any yet but I'm thinking about it. Any suggestions are appreciated.