Gold vs US Debt since 1971

The correlation of the gold price to the rapid debt increase since 2001 failed early this year. However, the long term correlation since 1971 appears to be back in play. The adjusted R-squared is 0.84 and the price is back within one sigma to the down side. Official US debt has not grown since May 31, 2013 and in fact dropped through May. The Treasury is using emergency procedures to manage payments until Congress passes another debt ceiling increase. Then, it will continue the inexorable climb toward infinity (see Japan). Economists generally acknowledge that sovereign debt is never meant to be paid back, only rolled forever. That works until a country runs out of credit. I am not predicting the US will run out of credit soon, but I do think there is some limit. Camels, straws, you know the story.

Here are the linear regression predictions:
Best Fit Price: $1467.56
One sigma up: $1672.72
One sigma down: $1262.39
Two sigma up: $1887.02
Two sigma down: $1048.09