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Analysis

The New Bubble in the Barbarous Relic that Is Gold

By Nouriel Roubini
12/11/2009 1:30:00 PM | Last Updated

In recent months gold prices have risen dramatically, first breaching the US$1000 barrier, then jumping another 20% in the past few weeks, surpassing US$1200 before correcting downward again to around US$1100. Some gold-bug bulls say the gold price could eclipse US$2000 in the next couple years. Is that possible? Is the recent rise of gold prices justified by fundamentals? An analysis of the facts suggests that a good part of this rise in gold prices is driven by a bubble.

A Recap of Recent History

Gold prices rise sharply only in two macro situations: first, when inflation is high and[...]

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