Aside from all the empirical data, however, probably the most obvious sign that gold is not in a bubble is the fact that the media and the government keep proclaiming it to be in a bubble. The media and the government never see bubbles coming.
Just look at Mike Norman, the Chief Economist for John Thomas Financial in 2006, nearly choke on his own tongue laughing at the thought the US housing market was going to collapse on Fox News (fast forward to the final minute).
In honor of Mike Norman, we will create the "Norman Indicator". When he appears on Fox News and almost urinates in his pants at the thought of the price of gold going down we will have to re-assess our view.
No other "bubble" in history has ever had so many people aware of its existence. It seems every man, woman and child is aware of the gold bubble and is incredibly vigilant to any information or data that agrees with their worldview.
As one example, a reader forwarded us this photo they took in San Francisco of a company that was being fairly extravagant (they had balloons!) about wanting to "buy your gold".
Surely this must mean the end of the gold "bubble" is nigh! There is a company operating in plain site that is in the gold business!
Note, however, that they are buying gold. Not selling. When there are line-ups in every major city and people calling in sick to work to run down to buy gold (like they did in 1980) then, maybe, we are nearing the end.
As well, another reader forwarded us an email, stating that Ebay had opened a gold & silver center. Surely, they intoned, this must mark the peak.
After all, you can buy billions of things on Ebay and now you can also buy gold and silver. What euphoria!
However, the thing is, even if we did start to see euphoria style buying and gold and gold stocks were the topic of conversation at every cocktail party, every taxi driver gave you gold stock tips and a picture of a golden bear rampaging through Wall Street was on the front cover of Newspeak... sorry, News Week, this still would not necessarily mean gold is in a "bubble".
Fiat Currency is the Bubble
Today's ADD culture and non-financial literate, government educated populace have forgotten that prior to 1971 gold, or at the very least something tied to gold, was money. Next month truly fiat global currencies celebrate their 40th anniversary.
All of the agents of the state and the international fiat bankers have tried for forty years to convince people that gold is a barbarous relic. But the fact of the matter is that this period since 1971 has been the aberrant period and the current rise of gold is not a bubble - it is simply a reversion to the mean, in which gold and silver are a more widespread part of financial and goods markets.
It is amazing how well the financial establishment has convinced people that gold is dead. During the 1990s and much of the 2000s anyone interested in gold was considered some kind of an anachronism, sort of like a cross between a stamp collector and a gun nut.
As gold rises it will not be a "bubble". It will not rise to a certain number. $2,000. $3,000. $5,000. These are all numbers batted about. But the fact of the matter is that the most likely outcome is that the 40 year fiat currency bubble not only collapses but fiat currencies become completely worthless.
The Return of Gold as Money
Ben Bernanke, sadly, was correct when he said gold isn't money. However, the day draws very near when he will be incorrect. On that date, Bernanke will likely find himself hiding in a bathroom with a pistol in his mouth or hung from a tree. So, he better enjoy his box seats at Washington Nationals games while he can. His voice quivers every interview because he knows this is coming.
Interestingly, much of the "western" world is still quite brainwashed and believe that the financial world for the last 40 years was real. Other parts of the world have never forgotten what is real money and what is not.
Global gold demand comes 20% from China and 32% from India. The US and Canada? Only 8% combined.
People who have lived off of debt, war and fiat currencies in the western world for the last 40 years are about to realize that almost everything they believed in wasn't true. They will be left holding scraps of paper that, in hindsight, they won't believe they could have been so silly as to think that pieces of paper with drawings written on them were something they considered of value.
Fiat currencies are the bubble and they are about to go pop. Your government won't tell you that. The talking heads on TV won't tell you that. You need to find this out for yourself before it is too late.