Montreal, Canada

With gold prices down 8% from their December 3rd nominal high of $1,217 an ounce, the bears are coming out of hiding this month predicting a "bubble" has cracked.

Some economists, notably Professor Nouriel Roubini – who accurately predicted the credit crash – is advising investors to run for cover.

Earlier in November I advised my subscribers in Commodity Trend Alert (shortly commencing its 8th year) to stop making fresh investments into gold mining shares; previously in mid-July my indicators turned decisively bullish and we aggressively urged members to load-up on gold, silver and the mining stocks. But we've come a long way since the October 2008 lows for gold stocks (+200%) and I still think mining shares are vulnerable to more profit-taking.

However, I've started accumulating gold again around $1,150 or lower on this correction. Over the last nine years corrections have provided great buying opportunities for gold investors – and this one won't be any different.

Though I remain an ardent gold-bug since 2002 and continue to strongly advise long-term accumulation in the midst of price corrections, some advisors believe otherwise.

Professor Roubini, on his web site earlier this month (http://www.roubini.com), stressed "The recent rise in gold prices is only partially justified by fundamentals, and is in part a bubble that could easily go bust […] the only scenario where gold should rapidly rise in value is one where fiat currencies are rapidly debased via inflation […] Although some diversification of gold in central bank and investor portfolios may make some sense there is little reason for bullion prices to rise rapidly towards $2,000 an ounce unless the world enters a period of high inflation or slips into a depression."

Tim Bond, head of global asset allocation at Barclays Capital agrees. "Leave others to enjoy the rise in gold." Bond is recommending speculators buy deep out-of-the-money puts as a relatively cheap way of buying downside protection against rising global interest rates. Though I wouldn't disagree about gold still being overbought and possibly offering an exciting short-sale, it's basically a mugs' game because the primary trend is bullish. Unless your timing is right and unless you truly believe the dollar has bottomed, it's a waste of time calling short-term price movements.

But is gold in a bubble? Since bottoming in 1999 at $252 an ounce the old relic has surged a cumulative 344% while posting nine consecutive calendar year gains. Over the last 12 months, gold prices have surged more than 30%. Naturally, the bull market is being fed by persistent dollar weakness and, since 2005, a broad rally vis-à-vis all currencies. Yet are we really in a period of irrational asset exuberance as it pertains to gold?

Jim Rogers, one of the few people who have mentored me in the investment business since 1991 recently downplayed the "bubble" assertion in a verbal dual versus Roubini on Bloomberg.

According to Rogers, who remains bullish on gold and several commodities, gold can't be in a bubble because in inflation-adjusted terms it remains 50% below its real price of approximately $2,250 an ounce. Also, in nominal terms, since peaking at $850 an ounce in January 1980, gold prices have gained just 32%. That's hardly a "bubble." It's the same story with many other commodities, including silver, palladium, agricultural commodities – all trading well below their inflation-adjusted peak in 1980. To call commodities a "bubble" is absolutely inaccurate.

In Montreal, several close friends and shrewd investors I exercise with at the gym have lamented this past week that they "should have purchased gold when prices were lower and regret missing the boat." That's interesting because for the most part I think investors have NOT purchased gold. Believing they've "missed the boat," most would-be gold-bugs are waiting for a much lower entry price. This tells me that gold is not in a "bubble" since most people aren't even invested yet.