Gold seems to have entered a new and more exciting stage of its bull market.

You'll remember, dear reader, we began urging readers to buy gold six years ago when the price was under $300 an ounce. Since then it has gone up in stages, as if climbing a staircase. We followed along, raising our "target buying price" in $25 increments. Our most recent target for buying was $425. But the price of gold, December contracts, rose another $7 yesterday...to $470.40. Today, we raise our buying target to $450 and hope the metal falls below that level once again so we have a chance to buy more.

Why is gold going up? Well, the very big picture is that the Empire of the Anglo-Saxons, led by Britain until 1917 and since then by America, is probably peaking out. It is an empire built on debt. All empires are self-limiting. An empire of debt corrects when the bills come due.

We put this in a long perspective: In 1913, the Federal Reserve was set up, giving the central government control over America's money. In 1917, Woodrow Wilson took the United States into a war in which it had no business. Germany was challenging Britain; it aimed to become the leading imperial power in Europe. America sided with Britain and gratefully picked up the imperial mantle in the process. In 1951, Harry Truman launched American forces into a major war, in Korea, with no declaration of war from Congress. Henceforth, the imperial president could make war wherever and whenever he wanted. In 1971, the last link between the U.S. currency and gold was cut by Richard Nixon; henceforth, the United States could print and distribute as many paper dollars as it could get away with.

This year, 1971, is significant in another way...it marked the beginning of the space shuttle program. Since then, about $150 billion has been lost in space. Readers will remark that valuable inventions have come from the space program. For example, NASA spent hundreds of thousands of dollars on one of them: the "space pen." It's a remarkable writing device designed for weightless conditions. It will write on any surface from any position. The Russians used pencils.

Today's paper announces a new spending program: $104 billion for further exploration of the moon.

"This development will open new worlds; and its consequences will go a long way toward cleaning up and vastly enriching the old one. It will not be merely revolutionary; it will be Promethean," wrote Rod Martin when the program was first announced.

We don't doubt it. We recall that poor Prometheus was chained to a rock on Mt. Olympus where crows ate out his liver for all eternity.

President Bush announced that nothing would stand in the way of spending on New Orleans. We'll spend "whatever it takes," said the president. No, we will not raise taxes to pay for it, he added. Then where will the money come from? Oh you silly, silly dear reader! Do you have to ask? The national debt is nearly $8 trillion. Every day for the last year, it has gone up by $1.54 billion.

Every day in America - in both public and private sectors - it's spend, spend, spend 'til your daddy takes the T-bird away, which is why gold is rising. Gold is protection against vanity, foolishness, absurdity and ambition. It resists revolution, war, inflation, and debt.

Wars...space programs...social security and health...reinforcing the dikes...rebuilding the cities - all of these things cost money. As a consequence of all these Promethean efforts, we Americans are chained to a mountain of debt. In addition to the official national debt is another $35 to $40 trillion that has been promised by various federal programs. And that doesn't count the private debt of $25 trillion or so. And every day that passes, the granite gets harder; as Americans add more mortgage debt, more credit card debt, more debt from hurricane clean-ups, foreign wars, and spacey programs.

We just wonder when the crows will show up. That's when gold will really fly.

Bill Bonner, back in London:

*** Over the years, home prices have proved the old adage: what goes up, must come down. An example a CNN Money report gives is of Los Angeles in the early 1990's. When you figure in inflation, the average house price dropped 34 percent from 1990 to 1996.

"History seems to dictate that the current price boom is at risk," the report tells us.

Hmmm...do you think the public is finally getting the picture, dear reader? Could the mania really be coming to an end?

"Bubbles do tend to last longer than most people expect," says Ingo Winzer, president of Local Market Monitor, which sells real-estate market analysis to corporate and consumer clients, "and end quicker."

*** Don't worry about Alan Greenspan's departure from the Fed, says a Wall Street Journal article, "central banking itself has been elevated." Oh yeah? That is what we are about to find out...

*** "It's interesting that few in the media have considered the implications of Greenspan's paper boom... not just the tendency of easy money policies to drive artificial appreciation in paper assets, but the repercussions of such," says Justice Litle.

"The idea is decades old - I forget who originally thought of it - but consider the notion of a government directly taxing its citizens through inflation, by way of the printing press. There wouldn't be a need for the IRS under this scheme. By simply printing more dollars to pay his debts, Uncle Sam could eat into your purchasing power directly if he chose.

"The big problem would be the obviousness of the method. Right now, inflation is a 'stealth' tax; by removing the IRS, the taxing nature of inflation would be out in the open. Better to keep it under wraps.

"It would also be possible to pay zero under an inflation-only scheme, by getting a return on assets greater than the erosion of your purchasing power. If the inflation tax in a given year caused purchasing power erosion of ten percent, for example, and your return on paper-inflated assets was twenty percent, you would be a net winner from the system. The government's pound of flesh would still be extracted, of course--just not from you. It would be taken from those who saw a net loss of purchasing power, unable to offset it with sufficient capital gains."

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.