Some bubbles aren’t that hard to spot. Timing them is another matter. Using traditional valuations I suspected that SoCal real estate was in a bubble in 2003. By 2005 I knew that prices here were unsustainable, the incomes of borrowers weren’t sufficient to handle the loans that they were taking out. But the top wasn’t in for another year or two.
With gold there isn’t the sort of outside metric like those which you can apply to real estate investing. Calling a bubble in gold is more subjective. What is driving gold is a lack of confidence in currencies, greater wealth in China and India, near-zero interest rates, a dollar carry trade, and a self-reinforcing belief that gold is going to go up. Breaking one of these trends probably won’t pop gold’s bubble. But if a couple of them reverse then I think we will see a dramatic decline in gold.