Some of this data was new to me so I will post the relevant info:

Interestingly enough, while fixed-income speculators are touting the illusion of a deflationary trap, the price of Gold is climbing to new all-time highs, hitting $1,260 /oz this week. The gold market is thriving in a world of ultra-low interest rates, and is squarely focused on the burgeoning size of the US-Treasury’s outstanding debt. On August 19th, the non-partisan Congressional Budget Office (CBO) forecast the US-budget deficit will hit $1.34-trillion this fiscal year ending Sept 31st.

CBO also predicted the budget deficit for fiscal year 2011, which begins on Oct 1st, would reach $1.15-triilion, bringing the Treasury’s debt to a record $14.55-trillion, and greater than 100% of the nation’s GDP. As a general rule of thumb, the price of gold climbs about $140- /oz for every $1-trillion increase in the amount of US-red ink. If correct, Gold could reach $1,400 /oz over the next 12-months, and could exceed this bullish forecast, if the Fed unleashes QE-2, as is widely expected.

For the full article, go to: http://www.kitco.com/ind/dorsch/sep082010.html

I still think the US is in big trouble but they are masters at all kinds of tactics that delay the inevitable so the charades will go on for a while but it is still strongly supportive of gold prices.

Glorieux