Is Gold a Bubble? 14 Charts, the Facts and the Data Suggest Not

Gold is higher and is trading at USD 1,668.90 , EUR 1,167.10 , GBP 1,018.40 and CHF 1,287.70 per ounce. It is slightly lower in euros but higher in U.S. dollars, Swiss francs, the Japanese yen, and the Australian and New Zealand dollar. Gold’s London AM fix was USD 1,667.50, EUR 1,167.50, GBP 1,016.77.

Gold reached new record nominal highs in majors yesterday and remains close to these record highs today and close to record highs in most fiat currencies. Gold surged 4.2% in Australian dollars yesterday – from $1,478 to $1,540 AUD to 1516 AUD. Gold is up nearly 12% in Australian dollars since July 1st – from $1,380 to $1,551 AUD today.

This shows that gold’s rally is broad based and is not solely a U.S. dollar phenomenon. It shows that markets and currency markets in particular are concerned about slowing economic growth, growing inflation pressures and continuing currency debasement.

After all the noise and theatre of the US debt ceiling debate and the botched deal and kicking the mother of all cans down the road, it is important to again focus on the primary fundamentals driving the gold market.

Is Gold a Bubble? 14 Charts, the Facts and the Data Suggest Not

Introduction

For more than 3 years - since gold rose above its nominal high of $850/oz in February 2008 - there has been much talk about gold being a bubble.

Nouriel Roubini, professor of economics at New York University's Stern School of Business, is one of the more prominent financial and economic experts who said gold was a bubble and many other experts internationally echoed his sentiments.

On December 10th, 2009, with gold at $1,100 per ounce, Roubini, said, "all the gold bugs who say gold is going to go to $1,500, $2,000, they're just speaking nonsense". Roubini went on to say ,"I don't believe in gold."

Gold has now risen 50% since then and Roubini has been silent on the gold price. (more)