WHILE equity and bond markets have remained relatively sanguine regarding the impasse in negotiations on America's debt ceiling, gold nevertheless achieved another (nominal) high today, at $1,622. That's one more milestone in an extraordinary run that began over a decade ago. As of Monday, gold's 10-year annualised real return was 16.8%. By comparison, American stocks managed a return of just 14.8% during the 1990s, in a roaring bull market.

Those kind of numbers are naturally prompting some debate concerning whether or not gold is in a bubble. While identifying bubbles is often challenging, gold is particularly tricky as it produces no cashflows and therefore has no intrinsic value.

What gold lacks in fundamental metrics, however, it makes up for with a lengthy record of historical prices, which are helpful in attacking the bubble question. For example, bullion dealer Kitco provides annual prices beginning in 1833. Adjusting the series for inflation, you come up with a long-term average price for gold of $483 per ounce-less than a third of its current price.

David Fuller's view As someone who has long viewed gold as a monetary asset, as have countless numbers of people over at least 6,000 years, I never cease to be surprised by the circumambulating lengths some people go to in an effort to contrive an academic valuation for gold in the post Bretton Woods era.

Trust is far more important than any fundamental metric, for evaluating gold (historic, monthly, weekly & daily) and people have learned or relearned that they cannot trust fiat currencies as a long-term store of value. However, they will trust some of them more than others, with perceptions regarding supply (money printing) being the key variable.

Gold shows bubbly signs from time to time, in my view, based on the number of articles and emails that I see, in addition to periodic spikes in the price. However, having lived through the 1979 bubble in gold, I can say without hesitation that we have seen nothing like that to date.

This begs the question: will we see a similar bubble in the current secular trend?

My answer is that we will see a bigger bubble this time, for several reasons: 1) much more paper currency is being printed; 2) this time the debt situation is considerably more ominous for western countries; 3) real interest rates are likely to remain lower in these countries for longer; 4) and possibly most important of all, many more middleclass and wealthy people around the world, who are interested in gold, are also able to participate. They are also experiencing more inflation in their faster growing economies.

Fullermoney has long maintained that this secular bull market will end in a big bubble as do most secular trends, from gold in the late 1970s to Japanese equities in the late 1980s to tech in the late 1990s and house prices in many countries in the last decade. We can also mention credit bubbles in the same breath.

When gold is in an end-of-cycle climactic bubble phase, I think many more people will actually own it rather than just talk about it. I would expect to see price gains of $50 plus to $100 a day. Gold would also be entrenched as a front-page news story.

I maintain that gold's eventual bubble ending will be caused by higher interest rates on a global basis. In other words, I will expect to see positive real interest rates in most countries in contrast to today's environment of mainly negative real interest rates.

Meanwhile, if gold is to retain its strong seasonal consistency, particularly as seen in odd numbered years, it will need to appreciate against all currencies, including the strong Swiss franc, Singapore $, Australian $ and New Zealand $.