Gold added another $11.30 Tuesday to hit $1,226 an ounce, and although the yellow metal is still well off its nominal all-time high of about $1,240 set just a few weeks ago, you don't have to be a member of the build-a-bunker-in-Montana crowd to believe gold could hit $2,500 in the next couple of years.

David Rosenberg, chief economist and strategist at Canada's Gluskin Sheff, tends to be pretty bearish, but he's also about as dispassionate and data-driven a guy as you can find. In other words, he's hardly some kooky gold bug. And if past relationships among data sets hold up, gold fever is just getting started, Rosenberg says.

"There is no doubt that when benchmarked against the CPI, money supply and GDP, gold can easily double from here," Rosenberg told clients in a Tuesday report. "Demand is always difficult to forecast, especially for jewelry, but we do know that central banks have very deep pockets and bought more gold last year (425 tons) than at any other time since 1964."

A Simple Matter of Supply and Demand

Which brings us to the issue of stagnant supply, and that too favors a sustained bull market in gold, Rosenberg says. Global mined production of the ductile metal hasn't increased in a decade -- and has actually declined outright in five of the past eight years. Furthermore, almost all the gold that's easy to dig up -- and therefore cheaper to get at -- has been unearthed. Gold companies in South Africa have to drill as much as 2.3 miles to get to new deposits. Meanwhile, all Federal Reserve Chairman Ben Bernanke has to do to create currency "is press a button," Rosenberg says.

"What makes gold different is that, unlike paper money backed by the good word of the government, it has withstood the test of time for thousands of years," Rosenberg writes. "It is not the liability of any government. It has an inelastic supply curve. How many times is gold mentioned in the Old Testament? Try 391 times. How many times is paper currency mentioned from Noah, to Abraham, to Moses? None. Nada. Efes. Gornisht. Nihil. Rien. Nichts. Niente."



Some strong technical forces also bode well for the long-term trajectory of the price of gold, as DailyFinance's Charles Hugh Smith wrote recently. For better or worse, gold does double duty as a safe haven in times of volatility and as a hedge against inflation. Anxiety is gold's friend, and for that reason its future gleams bright -- at least until the next global financial panic scares the punters out.

Gold Trade: Not as Crowded As You Think

Perhaps most interesting, this is the time of year when gold prices are supposed to be in decline -- at least until demand picks up again in September for India's wedding season. (India is the world's largest consumer of gold.) Furthermore, lest we forget, gold is priced in dollars, which means that as the greenback rises (and it's been shooting higher for months), gold is supposed to fall. But neither of those relationships is holding up much these days.

"We have not experienced the typical gold price and related equity weakness that the charts depict should happen, at least not yet," wrote Haytham Hodaly and David West, analysts at Salman Partners, in a Tuesday report to clients. "Although the European economic uncertainty has caused many currency investors to speculate positions out of the euro, it has also proven a positive for gold...with only short-term weakness despite the U.S. dollar strength."

Lastly, let's not overlook market sentiment. Perhaps the best case for being a gold bull these days is made by the horde of bears drawn to the scent of the seemingly overripe state of the yellow metal. As Rosenberg says: "Bulls need skeptics -- there is nothing worse than universal beliefs as they lead to overcrowded trades."

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