Gold is a monetary hedge par excellence. Looking ahead our huge debt burden requires a sizeable monetary inflation to keep pace. The prospects for gold look attractive. Momentum is building for a breakout. Gold is not only testing the important US$2000/oz level, but it is doing so against a background of growing optimism rather than the usual resigned scepticism. At first sight, this seems strange because according to the standard metrics of falling high street inflation and high real interest rates, the gold price should be lower next year, not higher. We are far more optimistic, for two reasons. First, gold is always more of a monetary hedge than a hedge against consumer inflation, and monetary inflation looks set to increase significantly. Second, Central banks outside of the G7 are buying gold. Curiously, G7 central banks are not yet buying. That is another story. Put another way, it seems that the US dollar is no longer the marginal reserve asset in the World economy.