To bet on gold, especially if one were to buy it at today's nosebleed prices, one must believe that the U.S. dollar will collapse in value and be replaced as the global reserve currency. You have to assume inflation will return to double digits as governments cope with admittedly massive debts they've taken on in combating the recession with their stimulus spending.
You have to believe some indebted nations, even the U.S., will default. And that, like the sovereign wealth fund (SWF) of Dubai a few weeks ago, all the world's SWFs will become insolvent, including those of Norway, Alaska and Alberta. You might believe, as some goldbugs do, that a medieval barter system is in our future.
For many former gold bulls, evidence has been mounting that the rally was weakening. They point to slackening demand for the actual metal combined with a surge in buying gold futures—an often highly leveraged bet that prices will keep rising. They say that at current prices, gold is trading ...
"Nouriel Roubini, economics professor at New York University and one of the few experts to warn about the epic U.S. housing bubble and its consequences when there was still time for central bankers to safely deflate it, this month warns about "the new bubble in the barbarous relic that is gold." Reminding clients of his financial advisory service that gold "has no intrinsic value," Roubini finds no fundamental justification for gold's rise "with no near-term risk of inflation or depression.""