These are nervous times for us. We started suggesting you buy gold a decade ago. If you did you'll have done very well. Your gold cost $250 an ounce then. It can be sold today for over $1,600 an ounce.
So what's the problem? That now you are all asking us when gold's bull run will end. And telling you when gold will be expensive is a lot harder than telling you it was cheap back in 2002.
Still, there are, I think, two answers. The first is, that gold will peak when monetary and fiscal authorities finally grasp the nettle and start protecting rather than actively working to debase the purchasing power of their currencies ie when real interest rates turn positive and keep rising from there.
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Right now it is hard to find a reason not to hold gold. You aren't getting a real return from any other kinds of money (interest rates are generally below inflation) and both the bond and equity markets are pretty scary places to be.
At the same time, given the lousy GDP growth rates in the UK and the US, along with the ongoing implosion in the Eurozone, it seems reasonable to expect not only QE3 in America and QE2 in the UK but a massive round of something similar in Europe too.
What happens, someone asked me at a conference recently, if everyone starts printing money at once? My guess is that we will see the answer to that unfold in front of us in the next two years and that part of the answer will be that the gold price keeps rising.
However at some point, things will normalise. Our currencies might not be worth as much as they are today when it happens, but one day interest rates will suddenly be higher than inflation. Most of the big banks who are all short-term bullish on gold these days think that point will come relatively soon. They are mostly seeing the Fed tightening in 2012.
I suspect the shift to positive real interest rates is a lot further out than that. If you look back to our chart of the decade you will see that in times of emergency, interest rates can stay low (and negative) for a long time. You will also note that in most tightening cycles, when the rises come they are faster and larger than most people expect. There is, as a reader reminded me this week, rarely any such thing as a 'little inflation'.
The second possibility of course is that the developed world's fiscal and monetary authorities never get a grip and the international monetary system actually does crack, in which case the sky is the limit for gold and I can't even begin to imagine where the peak is.
If you'd like to let your mind wander around the Armageddon scenario for a while, this graphic of US debt unsustainably big and arguments about the debt ceiling aside, well on the way to getting much, much bigger - should help.
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