There’s been a lot of talk lately about gold, some believe it is in a bubble, some it still has ways to go.
I favor the second view – I have followed gold for quite some time now – as this chart shows, gold is not overvalued, it is simply rising because it is priced in US dollars.
By raising the debt ceiling 8 times during the Bush years and a further 3 times since Obama due to massive bailouts and quantitative easing, the dollar is losing value, the more you print the less valuable it becomes against other currencies.
Another round of quantitative easing is foreseeable in the near future with the current sluggish economy and the failure by the administration and the Federal Reserve to recognize their methods are erroneous and not adapted to the situation.
Gold will still rise, add the possibility of a return to some kind of gold standard – abandoned in the seventies by Nixon who wanted to print for the Vietnam war – and defaults on the debt in the Euro zone and you could have a perfect storm for the yellow metal.