Gold was hammered on Friday as investors stampeded out of a crowded trade, me included.  The impetus for the sharp decline was the stronger than expected jobs report, and a fear that the Fed would start raising interest rates and withdrawing quantitative easing sooner than expected.

But does higher interest rates automatically mean lower gold prices?  The answer eventually is "yes" but not necessarily immediately.  In the last peak during the 1979-80 run-up, yields on the 10-year T-bond rose from 9% to 11% as gold rose from $200 to $850.

This does not mean that gold is impervious to rising interest rates in the short-term.  Gold may have topped.  However, it does not mean that gold has topped.

Remember, tech stocks kept rising when interest rates rose in the late 1990s, and housing prices went up this decade as the Fed tightened.  Asset bubbles usually do not pop at the beginning of the tightening cycle.  Asset bubble usually pop near the end of the tightening cycle.

Again, that does not mean that gold has not popped.  Gold may have.  These are not usual times.  The amount of monetary and fiscal stimulus in the economy is unlike anything we have experienced before, which is almost certainly changing the dynamics of asset markets.  However, do not assume that simply because interest rates may start rising soon, the gold run is over.