David Rosenberg, chief economist and strategist of Gluskin Sheff & Associates, shares my enthusiasm for the "barbarous relic", as it was once described. "While I am concerned near-term that gold is overbought and could be ripe for a setback; however, unlike the equity market, bullion is in a secular bull market, which means dips, when they occur, are to be bought. Gold can trade down to $1,130 an ounce and none of the trendlines would be broken," he said.

Here is the real interesting part of his analysis: "More to the point, secular bull markets usually end in parabolic blow-offs and we are nowhere near that point - see the chart below for what long-term trough/peak moves across different asset classes looked like in the past and tell us that gold is now in a bubble. Not a chance. And, as we have said in the past, if central banks were ever to be compelled to hold the same share of gold in reserves to back up their respective monetary aggregates, the gold price would rise to $3,000 an ounce."

David Fuller's view Taking the last sentence above, on the hypothetical basis that we had a gold standard once again, I think the price of bullion would have to be a lot higher than $3000 to cover the monetary aggregates of central banks. However I maintain that there is no chance whatsoever of a return to a gold standard, not least because no leading CB could afford the discipline required. Additionally, it would now be too easy for rogue states to manipulate the price of gold which is freely traded throughout most of the global economy (See also my timing assessment of gold posted last Thursday and Friday.)

The article above contains an interesting graphic comparing gold's percentage gain over the last decade with other secular bull markets in living memory.