While the debate rages on about whether or not gold/silver are in some kind of investment bubble, the facts completely obliterate any possible argument supporting the “bubble” thesis.
To begin with, we have yet to see the typical “blow-off” move higher, where investors chase the price of gold higher at all costs. In fact, those who remember the last time gold behaved in “bubble” fashion – 1979-1980, also remember that there were lines of people going out coin shops all over the country and around the block as buyers lined up to chase the price and supply.
Furthermore, the “cash-for-gold” business is still proliferating and profiting handsomely from people taking their gold/silver jewelry and other sundry “junk” items and selling it for a pretty big discount to the spot price. If gold were exhibiting the traits of a bubble asset, the cash-for-gold business would disappear and we would be seeing ads all over the place for businesses trying to sell into frenzied demand.
As it stands now, globally institutions have less than 1% of their assets invested in gold:
Given that in 1980, U.S. institutions had 6% of their holdings in gold, it is arguable that the gold bull market has yet to even cycle through the typical second stage of a bull market (1. smart money, 2. institutions, 3. public/blow off bubble). And based on conversations with numerous national coin dealers, maybe 2% of the public has started to buy physical gold and silver (obviously, they are still selling).