Here’s the most interesting exchange that I’ve come across so far from this morning’s Humphrey Hawkins testimony by Federal Reserve Chief Ben Bernanke before the House Financial Services Committee – Rep. Ron Paul (R-TX) asks about gold.

What do you thing would have happened if Bernanke had said, “The reason that people own gold is because they’re worried about central banks debasing the paper currency – as you know, it’s not really backed by anything…”

As for the answer to the question “Is gold money?”, it hinges on the “unit of exchange” part of the definition of money which, due to its limited use in commerce today, you’d have to say that gold fails. Then again, U.S. dollars come up short in the “store of value” definition…

It looks like it’s going to be another interesting day for precious metals as investors increasingly turn to gold and silver amid escalating troubles with government paper money around the world. Earlier today, the gold price reached a new record high at around $1,578 an ounce and appears to be headed toward $1,600.

After taking out the previous high reached back on May 2nd, there is again no upward resistance for traders to worry about and higher prices are more likely than not. Given the deplorable state of paper money these days, prices might go much higher in short order.

It’s been almost six months since the holdings of the SPDR Gold Shares ETF (NYSE:GLD) have risen by 20 or more tonnes in a single day, but that’s what happened today. As shown below, since George Soros sold most of his GLD holdings earlier in the year, the stockpile of gold bars held by the fund have about flatlined, some 100 tonnes below the peak last year.

During that time, the gold price has risen a couple hundred dollars, implying that the GLD ETF is now a relative bit player in the gold market, wealthy investors and big pension funds alike opting to store their own metal while India and China act like gold magnets for the rest of the world where ETFs are the exception and physical possession is the rule.

Oh well… twenty tonnes is twenty tonnes.

From last week… Don’t know how I managed to show up on this list and whether or not I actually wrote what it indicates, but, in this update of 90 gold price forecasts at Resource Investor, I guess $5,000 in five or six years doesn’t sound so far fetched anymore.

This updates an article published a by ResourceInvestor.com last summer when 72 analysts foresaw parabolic gold.

Of the 133 analysts who have now gone public in maintaining that gold will eventually go to a parabolic peak price of $2,500/ozt.+ before the bubble bursts, 90 – yes 90 – currently maintain that gold will reach at least $5,000 per ozt. Take a look here at who is projecting what, by when.
…

33 Analysts Believe Gold Price Could Go As High As $5,000

David Rosenberg $5,000
James West $5,000
Doug Casey $5,000
Peter Cooper $5,000
Robert McEwen $5,000 (by 2012-2014)
Peter Krauth $5,000
Tim Iacono $5,000 (by 2017)
Christopher Wyke $5,000
Frank Barbera $5,000
John Lee $5,000

Yes, round numbers are nice and $5,000 is certainly a nice round one, as is the company that I’m in with that forecast – Rosenberg, Casey, McEwen…

Erste Group has another special report out on gold (can they really be that “special” if these special reports are published on a somewhat regular basis?) and analyst Ronald Stoeferle appeared on Bloomberg to talk about their outlook for the metal, the headline generating quote having something to do with a $2,300 price.

There’s a “fear trade” in the West, but a “love trade” in the East where both China and India continue to demonstrate how loveable gold coins, bars, and jewelry really are.

GATA has hosted the Erste Bank report here for anyone who might be interested.