This is what an article on Bloomberg said gold should be worth now or at least is putting its "fair value" at $10,000. Of course, the price of anything is determined by buyers and sellers in the market, but these scenarios drawn up are always interesting to look at.
If gold does go to $10,000 per ounce within the next few years, it either means that it is in major bubble territory or else we are on the verge of hyperinflation. Let's hope, even for those with substantial gold holdings, that the price doesn't go this high. If it does, that means that there is major trouble in the economy.
If gold goes to $10,000 in the next few years, then it will be especially important to pay attention to the Fed. If the Fed does not show signs of tightening, then a complete collapse of the dollar really could be coming (which I predict is not likely). If the Fed is tightening and allowing interest rates to rise as it did in the late 70's and early 80's, then we can expect a major correction/ depression to occur that will make 1981 and 1982 look mild.
We must also keep in mind that velocity will continue to play an important role in the dollar and gold. If there is a perception that prices will continue to rise dramatically, then this will just make things worse as people try to dump their cash for hard assets. Velocity is one area of economics where perception really does play an important role.
Gold has pulled back in recent days, going below $1,800 per ounce today. Again, this is not surprising considering what it has done in the last few months and over the last 10 years. This presents a potential buying opportunity for those who do not have substantial holdings in gold and gold related investments. You never know which time will be the last train out. For all we know, the next phase up could be the final blast to the moon.
I have said before that I don't think we are in anything close to a bubble yet. There are too many people advertising for you to sell your gold. We need to get to a point where most of the commercials are telling you to buy gold before it is too late.
Maybe when we hear about coin flippers (as in house flippers), then we will know we are in gold bubble territory.