In an ocean of propaganda, there are few forms of disinformation as annoying as the endless “gold bubble” babble. Typically, precious metals commentators will refute such nonsense by pointing out that, compared to other commodity prices today, and compared to the gold price itself in 1980, gold is still unequivocally “cheap” and does not represent an asset bubble in any respect.

Despite the quintupling of the price of gold off of its absolute bottom, gold is arguably just as “cheap” today as it was when the price was below $300/oz. The reason is simple: the fiat paper currencies in which the price of gold must be expressed have been debauched/diluted (mostly by Western central banks and the governments they represent) just as fast as the price of gold has been able to rise.

Indeed, more worrisome is the fact that most Western governments look vulnerable to debt-default in their futures, with that fate all but inevitable for several European governments and (of course) the United States. Even worse than that, however, is that the actions of these governments seem to make it abundantly clear that they are prepared to embrace hyperinflation (and a de facto default through driving their currencies to zero ) rather than formally defaulting — and imposing the “hit” on bond-holders, which is the only path to solvency for several of these nations….

Originally from TheStreet