The price of gold has soared by nearly $1,200 in the last 10 years.
Today, it's around $1,450 an ounce. A decade ago, it was $260. That's a more-than-fivefold rise in the price of gold in a decade – which dwarfs the gains of the housing bubble of 2006.
So then... is gold finally in a bubble?
I checked in with former economics professor John Doody for his opinion...
John is uniquely qualified to answer – he understands economics as well as anyone, and he covers gold stocks in his newsletter called Gold Stock Analyst.
Here's John's take:
"It's amazing how the mainstream financial media continues to preach to investors that Gold is in a bubble. As if Gold must be doomed to failure by virtue of having been a great performer over the past decade.
"What the 'talking heads' can't seem to understand is that bubbles pop when prices lose all sense of reality, or when there's no one left to buy.
"Neither is the case with Gold, which is still far short of $2,300/oz, the inflation-adjusted previous high in January 1980."
John says gold is nothing like the last two bubbles we experienced... which were dot-coms and real estate.
"What powers Gold is not a fad investment such as the dotcoms," he says. "What does drive Gold is the basic human desire to protect the purchasing power of one's savings... The rise in Gold's price has coincided with the explosion of the total of U.S. Government Debt and the Federal Reserve's balance sheet assets...
"It's not that gold has risen, but due to profligate economic policies the currencies have fallen. It's the same ounce, but what took just $260 to buy a decade ago now takes $1,450.
"The U.S. Dollar's purchasing power has fallen over 80% in the amount of Gold it can buy. The decline is similar in the other currencies. Viewed properly in this manner, Gold is not in a bubble; the world's currencies are falling versus Gold due to their excess supply."
John is right. The numbers I follow don't show gold in a bubble, either...
Gold trading is remarkably sanguine. The surveys of investors show they're not wildly bullish. And you don't see wild speculation in the gold futures contracts or in gold ETFs.
Gold stocks are cheap as well...
In his newsletter, John has the best indicator I know of to value gold stocks versus gold. At the beginning of April, gold stocks were 7% undervalued relative to their "fair value," based on the price of gold.
Let me ask you this... If gold were in a bubble, do you think any part of the gold market would be undervalued? I don't think so...
People know about gold now. It's no secret like it was a decade ago. But the actions of traders and investors tell us gold is not universally loved, yet.
I believe John Doody is right... Gold is not in a bubble today.