Gold the Perfect Inflation Hedge

While the prospect for short-term inflation is muted, the risk in the longer (over the next 3 years) term is not. FOMC has controlling inflation as its goal, but the American people simply will not tolerate tightening to control inflation (if it surfaces) in the face of 8% or greater unemployment in the 2010 and 2012 election cycles. The fall of the dollar is an important factor that explains recent gold bullishness, but I think the bigger story is an appetite to hedge inflation risk in 2010-2012 due to the aforementioned political and fiscal (deficit, stimulus) risks.