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From The Washington Post:

The price of gold has been hanging near its historic highs, selling for more than $1,000 per ounce. In times of crisis — the terrorist attacks of Sept. 11, 2001, the collapse of Bear Stearns in spring 2008 — gold has spiked, as fearful investors grabbed for something they could hold onto.

But that’s not the case today. The U.S. is technically out of its Great Recession, Fed Chairman Ben Bernanke recently said. New jobless claims unexpectedly fell last week. The stock markets are riding a 50 percent rally since March. And yet, gold keeps going up.

That means a growing number of investors, traders — and, most troublingly, foreign governments — don’t believe in the strength of the U.S. dollar, analysts warn. People buy gold when there’s fear.

“It’s not the fear of an event of some sort,” such as a terrorist attack, said Peter Boockvar, equity strategist at Miller Tabak, whom I spoke to this week. “It’s the fear that the piece of paper in your pocket you call money will devalue over time.”

To stave off a liquidity crisis last year, Bernanke’s Fed turned on the money spigot, flooding the system — and world — with dollars. In the short term, that helped avert a second Great Depression. But in the long term, with each new dollar introduced into the system, each dollar you hold becomes worth less. That’s more than just inflation, which we think of as simply rising prices. That’s debasement of not only our currency, but the globe’s reserve currency. And that makes countries like China — which holds the greatest percentage of U.S. debt — very nervous.

“It amazes me that any self-respecting central banker is not alarmed that gold is over $1,000 and the dollar is trading at all-time record lows,” Boockvar said.