"Since the yellow metal began its decade-long ascent in 2000, there have been distinct periods of rising prices, most of which have begun in the odd numbered years, peaking in the even numbered years as indicated below.
The moves up in the 2001-2004 period are a bit difficult to see, coming off of a long bottoming process, however, the last three surges are so easily identifiable, it seems reasonable to just look at these three to see how the recent surge in the gold price compares.
At first glance, the most recent ascent looks like a smallish version of the last two, however, the steepness of the curve, not its duration, is probably what has people calling this a bubble.
If it is a bubble, based on the graphic above, it would clearly be the third bubble in the last six years which would call into question the use of the term “bubble” in the first place.
But, what is critically important when comparing the last three moves up for the gold price is to note the scale on the chart. For example, some quick math reveals that the 2005-2006 move from just over $400 an ounce to $725 was a gain of some 70 percent and this occurred during a relatively calm period when central banks were still selling their gold reserves as fast as they could and the entire world still thought it was getting rich due to rising asset prices.
The 2007-2008 jaunt from the high $600 range to just over $1,000 was a surge of about 50 percent which took a few months less to accomplish than the prior move. This occurred when there was growing fear of inflation but the sustainability of the global financial and monetary system was not being widely challenged as it is today.
Depending upon how you measure it, the most recent move only amounts to about 30 percent, though you can surely get a larger number if you start the measurement in late-2008 when the entire financial world looked like it was in the process of imploding.
In fact, picking starting points that were the “final lows” for each of the three cycles described above (a judgment that, admittedly, is somewhat arbitrary), the picture looks like this, the current “bubble” appearing to be still something of a “baby bubble”.
http://tinyurl.com/yee6jpd
