I actually agree with you pmc51. Demand for gold from people who actually use it (India for example) is down because the price is as high as it is. If the American economy starts to get some traction and the FED stops their asset purchases, I think you will see the price of gold come down. And to reverse the additional money that is in the system, all the Fed would have to do is start to sell the assets they have purchased. People have been beating this hyper-inflation drum for years now and what has happened? The stimulus the Fed is putting into the system in only replacing the liquidity that was flowing around so freely prior to the financial crisis. The pickup in the economy and the cessation of asset purchases will cause a flood of money into the US and the dollar will jump, and people who are supporting the price of gold right now by buying as a "safe haven" will move into areas where they can get a good return during the upswing of the business cycle. Ask yourself the question - where would you put your money if those 2 things happened?

 

As with any commodity, the price will drop to a point where the real demand (end user) will be able to support it. I'm not suggesting a crash in price, but I think a modest correction. The linkages between gold and value are different now than they used to be.

JMO