Nouriel Roubini takes a look at the gold bubble and gold bugs in his latest Project Syndicate column and comes to the conclusion that while "there are several reasons why gold prices are rising... they suggest a gradual rise with significant risks of a downward correction, rather than a rapid rise towards $2,000, as today's gold bugs claim."
Roubini echoes something I noted a week ago. If investors think economic recovery will be "anemic" there could be "a rise in bearish sentiment on commodities -- and in bullishness about the U.S. dollar." So they Fox News hypesters pushing gold as the only answer for troubled times could be leading their disciples right off the cliff.
But then there's Roubini's kicker!
The recent rise in gold prices is only partially justified by fundamentals. Nor is it clear why investors should stock up on gold if the global economy dips into recession again and concerns about a near depression and rampant deflation rise sharply. If you truly fear a global economic meltdown, you should stock up on guns, canned food, and other commodities that you can actually use in your log cabin.
Of course who is to say that fearful investors aren't doing all of the above? After all, gun sales in some of the most depressed parts of the U.S. have gone through the roof in the past year.