In this world, gold is the ultimate bubble because apart from the cost of actually digging it out of the ground it has almost no real fundamentals other than price itself. Investors have been buying it precisely because the price has been going up and is expected to carry on rising. Rising prices have created their own demand. It is the ultimately reflexive investment.

Rising gold prices have encouraged investors to add gold to their portfolios and central banks to reverse a long-standing drift towards eliminating the low-yielding asset from their reserves and start adding it instead.

In a thoughtful research note, Deutsche Bank argues that "the gold market is still some way from displaying the characteristics of a bubble" (Commodities Quarterly, Sep 28). But using the Soros idea of a bubble as a process, rather than simply a frothy end-state, gold has already been a bubble for some time as an ever larger group of investors has climbed aboard, propelling prices higher.

In an implicit acknowledgement of the role self-validating forces have played driving gold prices higher, one prominent gold analyst recently pointed out that gold still has the most compelling "narrative" of any investment.

In a research note, Barclays Capital explains "For analysts ... gold has traditionally been a tricky one due to its multiple roles as a commodity, currency, inflation hedge and hedge against credit risk and macroeconomic uncertainty. Gold is, in sum, more than a simple commodity, it's a hedge against fear" (Commodity Daily Briefing, Sep 23). Barclays might have added a hedge against deflation as well, another function cited by Deutsche Bank.

Eoin Treacy's view Investors are becoming increasingly aware of the competitive devaluation that major economies remain engaged in and can see that the purchasing power of their respective currencies is decreasing despite widespread threats of deflation. Gold hitting a new high is perhaps the most obvious signal yet that people are looking for a tangible store of value that cannot simply be printed. In tandem with slowing mine production, central bank hoarding, ultra low interest rates and a remarkably consistent uptrend, there is little evidence yet that the market is about to top out.

The NYSE Arca Goldbugs Index of un-hedged gold mines has been consolidating below the March 2008 peak for most of the year and has sustained a progression of higher reaction lows since July. It posted its highest closing value yesterday since the 2008 peak and a decline below 475 would be required to question scope for a successful upward break.

Of the larger gold mines, Newmont Mining is one of the better performers. It broke upwards to new highs in June but quickly pulled back and consolidated the advance. It has now rallied back above the psychological $60 level and a sustained move below $55 would now be required to question medium-term upside potential.

Cia De Mina Buenaventura broke upwards to new highs this week and a sustained move below the 200-day MA currently near $36.50 would be required to question medium-term uptrend consistency.

Newcrest broke upwards to new highs three weeks ago and has been consolidating in the region of the high since. Provided it holds at least half of its recent advance the medium-term upside can continue to be given the benefit of the doubt.

Higher growth companies such as Eldorado Gold continue to outperform. It remains in a consistent uptrend defined by an unbroken progression of higher reaction lows over almost 2 years. These would need to be taken out with a sustained move below $16 to question the integrity of the advance.

Randgold Resources broke upwards from the most recent consolidation last week and the low near $86 would need to be taken out to question medium-term uptrend consistency.

Centerra Gold broke upwards to new high ground three weeks ago and a clear downward dynamic would be required to check momentum beyond a brief pause.

Alamos Gold found support near the 200-day MA in July and hit a new closing high this week. A sustained move below $15 would be needed to question uptrend consistency.