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You’re right there. Even the Wall Street Journal agrees.

http://online.wsj.com/article/BT-CO-20110421-711445.html

Dollar Weakness Boosts Comex Gold, Silver

By Tatyana Shumsky Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)—Comex gold futures kept above the $1,500 level while silver set a record as a weaker dollar and thin pre-holiday trading volumes lent support.

The thinly traded April-delivery contract was recently up 0.3%, or $4.70, at $1,503.00 per troy ounce on the Comex division of the New York Mercantile Exchange.

The most actively traded contract, for June delivery, was 0.3%, or $4.90, at $1,503.80 per troy ounce.

A weak dollar kept gold prices buoyed above the $1,500 mark as investors opted for the safety of the precious metal. The euro rallied to a 15-month high against the dollar overnight as confidence in the greenback whittled further. The dollar has declined sharply since credit ratings agency Standard & Poor’s rattled markets Monday by putting long-term U.S. government debt on “negative” outlook.

The euro was recently at $1.4559, up from $1.4523 late Wednesday in New York.

“The dollar is the major motivator there right now,” said Stephen Platt, analyst with Archer Financial Services.

Gold is considered a store of value and an alternative currency and benefits from concerns about the integrity of paper currencies like the dollar.

Thin trading volumes also lent gold prices some support as trading slowed ahead of the long Easter Holiday weekend. Comex floor and electronic trading will be suspended Friday in observance of the Good Friday holiday. When trading volumes are low each trade tends to have a larger impact on prices.

Meanwhile, silver for May delivery set fresh 31-year highs as the contract gains on the 1980 record set when the Hunt Brothers of Texas attempted to corner the silver market.

The front-month contract was recently up 2.3%, or $1.020, at $45.485 per troy ounce after touching $45.485 earlier. The contract is still short of the 1980 front-month record of $50.360.

Silver for May delivery, the most actively traded contract, was up 3.2%, or $1.409 higher at $45.870 per troy ounce. The most-active contract hit a record $46.270, out-pacing the 1980 most-active high of $41.50.

Unlike the 1980 spike, silver has reached its recent highs thanks to a robust rally. Demand for silver as a store of value and a currency alternative has boomed as many price-conscious investors balked at gold’s $1,500 price tag and opted to safe-guard their wealth using the cheaper precious metal.

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I like to use this illustration with people: I have a stack of 10 Morgan silver dollars. I let people hold them in their hands and tell them that this is what, when I was in high school (I graduated in 1972) people put into vegas slot machines. They were worth a dollar and they were everywhere. The stack they hold in their hand was worth ten dollars.

Then I tell them that the stack has the same value now as it did then. It will make just as many rolls of film. Just as many electrical connectors, etc. However, people think it is worth more because they compare it to something that has been collapsing in value since 1972: US dollars.

That same stack of silver coins that I could get at the bank in 1972 for 10 dollars will now fetch $415. Think of that. A currency that has collapsed from $10 for the coins to $415 for the coins in less than 40 years. And to make matters worse, most of that collapse has been in the last couple of years. That is called exponential collapse.

And you think the last couple of years were bad? See what the future brings. The fundamentals are all there.

Side note: Compare the profits made by two men, one who bought $10,000 of gold in october of 2008 and the other who bought $10 of junk silver in 2008. The latter has seen his investment increase in value four fold while the former only saw a twofold increase.

And I still think silver is an absolute steal!