Since President Obama took office, the price of gold has more than doubled to about $1800 an ounce, and public approval of his handling of the economy has more than halved. These are much connected events.

During the 1980s and 1990s, thanks to new technologies and market deregulation by Presidents Carter, Reagan, Bush, and Clinton, the U.S. economy enjoyed a renaissance—falling inflation, stable growth, low unemployment, and decent returns on stocks and bonds.

“Sound as a dollar” took new meaning as central banks around the world sold off gold holdings and increasingly backed their currencies with greenbacks. The dominance of the dollar, in part, inspired Europeans to create a rival currency—the euro.

Holding gold makes less sense when the U.S. economy is doing well and confidence in the rule of law ensures that investors will get solid returns on portfolio investments. After all, gold is costly to hold, and it pays no dividends or interest.

In 2000, the U.S. federal budget surplus was $236 billion, the S&P 500 index hit its inflation adjusted peak at 1520, and gold sold for $280 an ounce.

Since, King Dollar has been shattered by Presidents George W. Bush and Barack Obama. Thanks to big deficits, the world is now awash in dollars and Treasury securities, which function much the same as cash in international finance and commerce. The U.S. economy—overwhelmed by subsidized imports from China, bleeding to pay for expensive foreign oil, and hamstrung by intrusive and often counterproductive new government regulations—can’t grow.

By 2007, the year before the financial crisis and Democrats took control of Congress, George W. Bush’s free spending on agricultural subsidies, military adventures, prescription coverage for seniors, and tax cuts turned Clinton’s surplus into a $161 billion deficit.

Enter Nancy Pelosi and then Barack Obama, and government spending exploded from less than 20 percent of GDP to nearly 26 percent. Increases in the regulatory bureaucracy and government pay, new Medicaid and Medicare entitlements, and crony spending on fraudulent solar energy schemes, bailouts for Chrysler and GM and similar follies push up federal spending by $1.1 trillion in four years. Inflation would have required only $200 billion.

Meanwhile, after nearly two years of economic recovery, real GDP is stuck at 2007 levels, family incomes are falling and the ranks of the unemployed and poor swell every month.

The President doesn’t grasp the magnitude of the structural problems holding down real growth. He refuses to develop domestic oil and gas and genuinely confront Chinese mercantilism. He refuses to address business concerns about overregulation and a generally hostile environment to private enterprise.

In the name of lowering costs, Obama Care mandates the scope of coverage businesses must offer employees, but insurance premiums, drug prices and co-pays are rising at an alarming pace. Mr. Obama simply ignores this failure.

In the Chrysler bankruptcy, the Administration managed to pressure a federal judge to subvert 100 years of bankruptcy law to award company assets, which should have been distributed to creditors, to the UAW and an Italian automaker.

In yet another payment to organized labor for campaign support, the National Labor Relations Board—stuffed with recess appointments—sued Boeing for opening a factory in South Carolina. Now, the President will decide which states are permitted new manufacturing jobs.

He can’t persuade Congress to put a limit on CO2 emissions, so he proposes to curb those by administrative fiat. He punishes the entire oil industry for the sins of one rouge company.

Overreach is so intrusive that it borders on expropriation.

U.S. companies are investing in China for good reason. Beijing likes capitalism and aspires to global leadership, things Barack Obama appears to distain. And for all their complaints about intellectual property enforcement in China, U.S. investors may enjoy greater security under the law in the Middle Kingdom than in the Middle West.

Over the next several years, GDP growth will likely be no more than 2 percent, perhaps less, and given the paltry targets set for the congressional super committee on budget deficits, the federal spending gap will likely exceed $1 trillion for many more years and social security likely will be broke within two decades.

All that money and U.S. bonds, which function much like money, will eventually drive up inflation. With bonds paying little interest and stocks going no place in the current atmosphere of fear, many investors go where fear always takes them—into gold!

As the President campaigns around the country for his economic policies, even some liberal Democrats are pushing back. He finds fewer supporters to pay for $457 billion in additional temporary stimulus spending with permanent tax increases and cuts in aid to states to pay for health care.

Gold is high and Mr. Obama’s approval ratings are low, because investors and voters see the economy failing and an American President who cannot learn from his mistakes.

Peter Morici is a professor at the Smith School of Business, University of Maryland School, and former Chief Economist at the U.S. International Trade Commission.