Gold has appeared to have stabilized at a level above US$1,100, close to a recent 52-week and record high. For those following the price of gold, this is in line with annual increases over most of the last decade. It also coincides with seasonal variations in the metal’s price. Typically, due to demand from metal fabricators in Asia (China, India, and the Middle East) the price of gold tends to increase from late summer and early fall through the late winter and early spring months of the following year. This pattern was broken in 2009, quite possibly due to the unhealthy global economy, when the price of gold maintained more or less steady rates of appreciation to the present.

The meeting of the Asia-Pacific Economic Cooperation (APEC) group in Singapore may provide an opportunity to reflect on the direction that the U.S. Administration is now taking in international relations and economic affairs. Despite talk of a strong U.S. dollar by Treasury Secretary Timothy Geithner during his trip to Asia, as well as President Barrack Obama’s comments while in China, events surrounding APEC may be instructive for understanding the potential for the further currency devaluation, a slower global economic recovery, and higher gold prices.

It is becoming clearer that higher gold prices are tracking prospects for further devaluation of the U.S. Dollar. This is a result of the falling relevance and global stature of the U.S. economy, military and political cohesiveness. The stability of gold as a currency provides one of the best and most immediate polls on the direction of a nation’s future.

The gains recognized in the stock market may be short lived. Despite reactivated liquidity moving into the stock market, a loss of confidence in discounted future earnings may lead to a correction in the near term. If rapid growth in the U.S. economy is slow to materialize, and the ranks of the “long-term unemployed” continue to swell, the Federal Reserve will become increasingly frustrated in its mission to achieve “full employment.”