One plausible theory of the absence of inflation is that very little of the newly printed money has been lent out and multiplied throughout the economy.

Yet the monetary base and money supply are highly correlated, almost 1-to-1 between the two.

That means that as the monetary base expands, the money supply surely follows, though there is a lag. (Money supply is a broader measure of money than just the monetary base, as it includes personal deposits and more. The monetary base is like a kind of monetary yeast. It makes money supply rise.)

If money supply grows faster than the economy that will create inflation as it is impossible for the economy to grow anywhere near the vertical spike in the monetary base, inflation is coming.

The U.S. is not alone in its money-printing exercise. The supply of most currencies is expanding rapidly – even the normally tame Swiss franc. In the race of paper currencies, they are all dogs.

Therefore, the interest in gold, which no government can make on a whim. In the content of the exploding monetary base, gold seems relatively cheap.

As the money supply rises, so does the price of gold, eventually. As a result, gold has been a perfect hedge against inflation."

There is some slippage over time.

The gold price can change faster or slower than the money supply. But when the market gets worried about inflation, the gold price usually changes much faster – as happened in the 1970s.

In 1973 – to pick a typical year – inflation was 9% and gold rose 67%.

That was a pattern common in the 1970s. The potential for inflation this time around is greater than it was in the 1970s, given that the growth in the monetary base is so much greater than it was in the 1970s. Gold could do much better this time around, reaching "$3,000 or $4,000, or $5,000 per ounce.

Future historians will look back at the present day and see clearly how this unfolded.

They will see the litany of news items that pointed to the dollar losing its top perch: China and Brazil are settling up trade in their own currencies.

The Russians and others are openly calling for a new monetary standard. Even mainstream outlets are discussing alternatives to a dollar-based standard, a province once solely occupied by cranks and gold bugs.

Not a week goes by without these kinds of stories. As for a replacement waiting in the wings, gold is a likely candidate. Indeed, a kind of "de facto gold standard" seems to be taking shape.

The SPDR Gold Trust, the largest gold-backed security in the world, is now the sixth largest holder of the metal in the world. Anybody with a brokerage account can easily buy gold today through the trust, which trades on the NYSE under the ticker GLD.

Be aware that you are buying paper not physical gold bullion.

It's still early.

Most people still own no or very little gold. As it becomes clearer what's happening, they will buy more gold, especially as it is now easy to do so.

The gold supply, too, is limited against the vast pool of dollars.

Global money supply is 72 times the value of gold. I'm betting that gap will narrow.

It only has to narrow a smidgen and the gold price flies. "Gold is a speculation. But it is a speculation on a certainty: the debasement of the currency."

Gold stocks, too, are a speculation. But they are a speculation on an inevitably higher gold price.

Bob Tonachio is CEO of Robert James & Associates, Inc. He may be contacted at 1-800-530-5700.