Notice that other commodities were spiking at the same time as gold in 1980. This is what I mean when I say that gold will go up a lot in dollars, but its purchasing power in terms of other commodities will only go up 2 to 5 times.
These charts also shows what I mean when I call the gold the herald of a dollar collapse: when gold prices spike, the dollar is always falling against other commodities.
Commodities peaked exactly one year ago
During the first half of 2008, Commodity prices soared. This means gas/food prices were heading up and up right until July one year ago.
Chart of USO (track oil futures)
Although gas and food prices are half what they were a year ago, when oil was hitting $144, Chinese prices are only down 1.4 percent.
During the second half of year commodities tanked. Gas and food prices fell. As we more into the second half of 2009, CPI is going to be calculated against last years plummeting prices, so CPI numbers will start showing some serious inflation by the end of September, especially in China.