the time to add is now., page-60

BB's right guys. The reason gold didn't fly in 2008 (and up until now) was because people were going for the USD as a safe haven (more than gold) and for US bonds when things got bad (and, to a lesser extent, the yen). For most of the time the USD and gold have been in opposite lock (although there was a period when both went up at the same time, albeit briefly, which got me a bit excited).

I believe there are 3 broad scenarios (oversimplified for brevity):

(1) Growth picks up again (V-shaped recovery), all the fiscal stimulus and low interest rates cause massive inflation (which Western govt's welcome because it allows them to deleverage their way out of this mess) = classically good for gold

(2) Growth stays in doldrums (long U or L-shaped recovery). If declining consumption then causes a negative feedback loop and deflation = bad for all asset classes including commodities and including gold (go cash)

(3) ***wildcard*** massive govt. borrowing forces bond crisis which pushes yields and ultimately borrowing costs up (despite govt. efforts to keep them down thru QE etc) and the USD starts to tank = maybe initially good for commodities (incl gold) as people attempt to flee from fiat currencies (at least those of debtor nations like US,UK, Europe), but if it gets really bad just go gold

Also to consider:
- If USD gold goes up there's still the issue of rising AUD limiting the AUD gold price, but if gold really goes so will AUD gold.
- BRIC noises about moving away from trading in USD's to their own currencies or one via IMF might hasten (3) and China reserve buying of gold won't hurt either.

Disclaimer: I picked some GMR's up earlier on, just for the ride, and I'm enjoying the profit but not nearly as much as I'm enjoying watching the ramping ;-)