There are, of course, other opinions worth considering:
Another opinion is that the recent run-up in gold is based on the
fear of future inflation, not actual inflation; it is based on the
fear of money creation, not actual money creation. If at some point that fear doesn't become reality, then the price of gold will look like Wile E. Coyote (Super Genius).
The gold story starts with a few facts and then jumps into speculation. It begins with the fact that global central banks took unprecedented action in cutting interest rates and expanding reserves. The facts kind of end there. The speculation is that eventually the monetary and fiscal stimulus works and those reserves get multiplied into money. Naturally, in this telling, global central banks sit on their hands as inflation rages out of control. In some versions central banks not only sit on their hands but abandon all independence and aggressively monetize sovereign debt turning high inflation into hyperinflation. According to many versions this worse case scenario is not only a base-case, it is "inevitable" . . . Zimbabwe here we come!
But actual events aren't playing out according to script. Inflation is still trending downward. Meanwhile pressure is building globally to reign in federal deficits and several governments are taking concrete action. These austerity steps will further reduce the
demand for money, which will continue to retard money creation through normal channels. The E.C.B. refuses to compensate (the recent bond purchases were sterilized) even as several of its members plunge toward depression. In the U.S. all the talk at the Fed is over "normalizing" policy, raising rates and liquidating assets. Individual States are slashing budgets. And even the large amount of federal borrowing has been entirely offset by a decline in private borrowing.
In 2008 all the forces of government were used to stop the financial collapse, with good effect. Now those forces are starting to be thrown into reverse at a time when inflation trends are still heading downward . . . Japan here we come!
Oh, and a final message to Wile E. . . . look out below.