All that glitter to start 2008.

Waving the old year goodbye with a few new records under the belt is no mean feat, but the real glitter for gold bullion is that most indicators seem to point to more good news down the line.

The first record is that the gold price recorded its first ever month-end close above $800 on Monday, December 31. Gold had only closed above this level on two days during its 1980 surge, namely $830 on January 18 and $850 on January 21. However, the end of January 1980 saw the price significantly lower at $659.

Looking at monthly averages, January 1980 was $675. This figure was equaled in May 2006 and exceeded for the first time in April 2007. A new record of $806 was established in November 2007, whereas December's average was slightly lower at $802.

It is, of course, true that in inflation-adjusted terms the gold price is still a long way off its euphoric days of 1980. If adjusted for movements in the US consumer price index, the $850 record would today be around $2,250 and the average for January 1980 around $1,790.

More importantly, the gold price is not only making headway in US dollar terms, but also in most major (and minor) currencies. This is a manifestation of increased investment demand, whereas the initial rise in the gold price from its low in 2001 ($250) until the middle of 2005 was mostly a reflection of US dollar weakness. The World Gold Council reports that identifiable investment demand during the third quarter of 2007 was nearly double year-earlier levels in tonnage terms.

Gold has now entered record territory in terms of most currencies other than the US dollar. This includes the currencies of the two largest consumers of gold, namely the Indian rupee and the Chinese renminbi. (China has just overtaken the US as the second largest gold consumer after India, according to the World Gold Council.)

The one situation that could be bad for gold is when deflation takes over and there is a panic for cash in order to stave off bankruptcy. A variety of assets, including gold, would then be sold in order to raise dollars. But this state of affairs is rather unlikely while central banks are at liberty to create money out of thin air.

I cannot help but conclude that we have not yet seen the last of the yellow metal’s new records and that more excitement lies ahead. For starters, I will not be holding my breath for the all-time high of $850 to be breached. After all, platinum, which often leads gold higher, has already recently recorded an historic high in US dollars.