Is gold in bubbly territory?

‘A bubble is a bull market in which the user of the word ‘bubble’ has not fully participated.  You can think of gold as a stock that went from 2-5/8 to 18 in a dozen years.  I’m not sure that’s a bubble.  It is the nature of gold that its valuation must forever be a mystery.  It earns nothing.  It pays no dividend.  No conference call, no management to call up and complain to.  What I do think is gold is simply the reciprocal of the world’s faith in the institution of managed currencies.  It is one divided by T, where T stands for trust.  And trust is a shrinking number and will continue to shrink.  Therefore, I am still bullish on gold.

If a bubble connotes absurdity, what is absurd are the monetary conditions that supported this gold bull market.  Gold is an expression of the world’s justifiable distrust of the way our central bankers conduct their affairs.  The poetry of it is that it can’t be quantified.  The central banks are unworthy opponents.  The Fed has pledged 0% money-market rates for the next two years, so that’s not much competition.  And the governments of the world are taking under advisement this notion called financial repression  — short-circuiting market mechanisms, capital controls, punitive taxes or intrusive taxes and the like.

This is economist talk, made not on the couch, but in the pits.  Gold is a desirable asset for people who wish to get out of the way of the fire of financial repression, which is more a threat at the moment than a promise.  Governments certainly have it in their capacity to interrupt capital flows and make life difficult for people with wealth.”