It looks like gold is near a major intermediate term bottom. However, I think it will be a bear market rally given that the decline off the 2011 peak has been a five-wave decline, which, according to Elliott Wave theory, is the first leg of a larger decline.
I find classic characteristics of a market bubble in the 2008-2011 gold rally. It was a frenzied rally driven by fear of hyperinflation as central banks began Quantitative Easing. There was a pervasive sentiment in the media that gold was the “smart” investment to protect yourself in volatile times. I think the bullish sentiment in gold was comparable to the tech-stock euphoria in the late 1990s. During 1998-2000, the NASDAQ Composite rose from 1300 to 5100. Afterwards, it retraced that whole rally and bottomed out below its 1998 low in 2002. I think that gold will ultimately retest its 2008 low of $681 within the next few years.
Despite the NASDAQ’s crash, the software industry didn’t go away, and since 2009 it’s been one of the hottest market sectors. Likewise, I would not deny that in a generational time frame, gold is probably one of the safer investments, especially as loose monetary policy is becoming more accepted as a way of dealing with financial crises.