If you've been holding Euros over the past few years, you would barely notice that precious metals prices have risen. But for those of us with US currency denominated assets, the dollar just doesn't buy as much gold, gasoline, or groceries as it used to.

Two questions arise: where are gold and the dollar going, and when will anyone notice?

This week gold prices surpassed the $440 mark for the first time since Michael Dukakis was the Democrats’ best hope for the presidency. Gold soared despite oil prices finally falling below $50 a barrel, with today’s Wall Street Journal declaring a “Looming Oversupply of Crude Oil...” and the strong prospects of an oil glut going forward, at least for the near term.

Another catalyst for higher gold prices this week was the announcement of PPI numbers coming in at 1.7% for the month of October. That implies an annual wholesale inflation rate of over 20%, a number which seems reminiscent of the Carter administration. And then the October CPI, or retail price index, came in at .6% for the month, which works out to some 7.2% per year, a number much less shocking then the wholesale price jump, but certainly a higher rate of inflation than we have seen in the past 20 years or so.

One has to wonder what the powers on high think about today’s gold price. All we’ve heard so far is a sunny case for a measured and benevolent slide in the dollar. Today’s commonplace is that the dollar has to and will drop about 20% versus the world’s other currencies just to come into proper adjustment with our twin deficits.

The only alternative to this 20% de facto devaluation of the dollar foreseen lately among those schooled in economics, monetary, and fiscal policy is the more frightening prospect of a tumble of something like 40%, a rout or panic which is the sort of event that could trigger a world-wide crisis.

Which brings up the question, does anyone in Washington even care anymore about the price of gold? With all learned hands in agreement that the dollar should and will fall, preferably in an orderly fashion, does the surge in gold prices versus the dollar actually concern anyone in charge?

Undoubtedly, that old gold-bug Alan Greenspan has his eye on the gold price, and he certainly can’t consider its precipitous rise to be an altogether healthy thing. Yet, all the Chairman and the governors of the Federal Reserve ever seem to acknowledge as one of their worries is the bogeyman of deflation. Is there some point that the canary in the coal mine known as the price of gold in dollars starts to bother them? And will we actually ever hear them making public utterances expressing that concern?

One thing is for certain in the current closed-shop climate in Washington – If we don’t hear from the independent Mr. Greenspan himself on the subject, then silence will rule. Gold’s inevitable rise as the asset of choice when the currency is under attack from so many sides will not be met by any official voices raised in objection to the cheapening of the dollar, because they are all complicit in that cheapening.

That’s a shame. Because the very definition of inflation is a cheaper currency, money that buys less today than it did yesterday. And all this bright and absolutely cheerful talk about devaluing the dollar in order to make our exports more affordable around the world disguises the fact that such devaluation is theft by inflation, making the money that you own today worth less in the future.

“Things are not out of control,” Richard DeKaser, chief economist at Cleveland’s National City Corporation, declared to Eduardo Porter of the New York Times this morning, “but the complacency about having benign inflation has been exaggerated.”

In fact, the currently ongoing linear devaluation of the dollar is the most benign scenario imaginable. The less palatable possibility is that the dollar’s slide accelerates into a run, and then all of a sudden things really are out of control.

One thing is for certain: higher gold prices signal current and future weakness in our currency. So far, few Americans even seem to care.