Over the past week, the U.S. government has pretty much nationalized Citigroup and AIG, two of the nation's largest financial firms. In forms filed with the Securities and Exchange Commission after the close of American stock markets last Friday, Bank of America, Wells Fargo and Citigroup reported that bad loans had overstated the value of their combined assets on their financial statements by more than $75 billion.

As you might expect and probably have already seen in the news coverage, U.S. stock markets hit new long-term lows already this week.

Mainstream investors, those who typically invest in paper assets, are now filled with fear like I have never seen in my lifetime. Some are starting to panic. They don't understand what is happening, or what to do about it.

This lack of understanding is not unique to mainstream investors. By now it is obvious that the U.S. President, his top advisors, congressional leaders and regulators have no idea what is happening or what to do about it.

Since his inauguration, every time that President Obama or Treasury Secretary Geithner has given a major speech, the stock markets have fallen. Actually, since the November elections, the Dow Jones Industrial Average has declined more than 30 percent.

Further, it seems obvious to me that most financial commentators on television programs are equally clueless. It is sad but almost humorous that most have been calling for a stock market bottom almost every day since the autumn of 2007.

In times of uncertainty, investors flee to safety. In today's market, there are three choices for safety:

U.S., Treasury debt
U.S., dollars
Gold and possibly silver

With global stock market indices dropping sharply on Monday, the interest rate on U.S. Treasury debt declined, meaning that the price of the debt increased. The value of the U.S. dollar hit a three-year high. And the price of gold - fell!?

After the devastating financial news released late Friday, the price of gold rose by more than 2 percent. When, the gold markets opened Monday, they were hit with multiple sudden sharp price drops, with the gold spot price down into the mid-$920s in late U.S. markets.

Investors around the world understand that the price of gold represents an informal report card on the value of the U.S. dollar. When fearful investors are fleeing to safety, the U.S. government has a huge interest in suppressing the price of gold. What happened on March 2 is just one more textbook example of gold price suppression.

In the past week, former Assistant Treasury Secretary Paul Craig Roberts released an essay where he wondered when the U.S. Treasury would stop leasing its gold reserves. In a subsequent interview, Roberts stated that he did not have personal knowledge of such Treasury actions. However, he was convinced that this had happened by the growing body of publicly available information.

Even the current issue of The Economist includes a discussion on the value of owning gold.

Last week, I projected that the price of gold would not fall far from $1,000 before finally rising above it to stay. In my mind, it seemed like a level just under $950 would be about as low as it could go. I had not counted on the growing list of financial catastrophes that are forcing the U.S. government to bring out its whole bag of tricks to suppress the price of gold.

The unemployment information to be released this Friday will almost certainly be of doom-and-gloom proportions. That will create another wave of interest in owning physical gold (and silver) and also spur the U.S. government to use its full spectrum of resources for holding down prices. There is a possibility that this could be the last major manipulation effort.

When the Dow Jones Industrial Average finally breached the psychological 1,000 threshold to stay, it quickly rose, and never went back below. I expect the price of gold to top $1,000 to stay by the end of April. As with the Dow Jones average, I think the $1,000 threshold for gold will just be the base for its next major move upward.

Numismaster