Gold? I believe it will go higher. But gold is faith -- not logic. Gold is reading tea leaves and emotions. The question you need to ask: Is gold a bubble or will more people flee to it? It's up 55.4% in the last year and 14.6% in the last 30 days. In January, 1980 it topped out at $825.50 an ounce -- about $2,300 in today's dollars -- (it's now over $1200) and then sunk to $298 by June 1982. Richard Russell, gold bull, writes:

Gold is now like a "wrecking ball," smashing through everything in its way. On the Comex there's a huge short interest in the Commercials, in large investors (usually the funds) and in the small investors. Gold is pushing the shorts to the wall as I write. Now we hear stories of Barrack gold closing its hedge book by buying billions of dollars of gold. We hear of nations standing in line to buy the rest of the IMF gold that's for sale. We hear news of various central banks reversing their anti-gold stand and now buying gold instead of selling it.

So far, the only populations that are buying gold are the Chinese and Indians and probably other Asians. As gold flows to China and the developing nations, it's a sign that the East is growing stronger and the West is growing weaker. The only policy the US government has regarding gold is stupidly to deny its power and validity. Example, the Treasury values its huge gold hoard at 42.20 an ounce. The Washington establishment remains blissfully ignorant of the very meaning of gold.

A fellow called Babak, gold bear, writes on Seeking Alpha:

Gold is up 37.5% for the year (so far) and up 70% from its November 2008 low. That’s especially impressive compared to the S&P 500 which is only up 23% for the year. So how long can this out performance last?

One of the most adamant and unapologetic gold bulls for the past few years has been and continues to be David Rosenberg of Gluskin Sheff. Recently Rosenberg opined that gold could even rise to +$2000 levels:

If China were to lift their gold reserves to 5,000 tonnes, which is equivalent to about two years of global production, that shift in demand would boost the gold price by $800/oz to around $2,000 ($1,978) based on our models. If China moves towards 10,000 tonnes, well, that would end up taking the gold price to $2,623/ounce if our calculations are in the ballpark.

The operative word here being, if. Dashing the hopes of gold bugs, Hu Xiaolian, the vice-governor at the People’s Bank of China, called gold a bubble and threw cold water on the idea that the Chinese central bank would increase their gold reserves.

But even an unabashed gold bull like Rosenberg concedes that a correction is imminent. For one, fund flows into gold have ballooned: gold holdings in ETFs is now 1766 tons, that’s an increase of 48% from last year. Even if we ignore that, there is an unmistakable whiff of giddy optimism from several gold sentiment measures.

If we reduce this to a high school analogy, it is difficult to be a rebel and stand out when everyone else is rebelling. And if we ignore those high falutin’ gold sentiment indicators, the chart is screaming MANIA! as gold rises into a parabolic blow off (again).

And if we ignore that, then there is the data from the Commitment of Traders reports which are showing a record high in net long positions for speculators:

That is the footprint left by giants like John Paulson, Paul Tudor Jones II and other hedge funds who have piled into this trade.

The thing is, an immediate 25% correction would only serve to take us back to long term support. During gold’s 8 year bull market, it has almost always managed to ricochet off its 200 day moving average. The only exception was in 2008 when price pierced that support by 25%.

But just like an airplane losing its engines in mid-flight, gold won’t plummet straight down. So we’re looking at a possible correction between 20-40%. When that will come about, I don’t pretend to know.

And most importantly, such a correction would not negate the long term bull status of gold but merely be another short term correction, just like the many we’ve seen before.

How bad is it? The Paris restaurant La Tour d’Argent will sell 4 percent of its 450,000-bottle wine collection, a first since the restaurant opened in 1582.

Going shopping? Try bargaining. Try offering 15% to 20% lower. You'll be surprised how many shops, these days, will say, YES.

10 awesome foreign airports that make ours look awful. They include Incheon, South Korea, Singapore Changi, Abu Dhabi, Munich, Amsterdam's Schipol, Click on Green Sheet.

Heh, I didn't have anything in Dubai. But they did build the world’s largest tower (not completed), an indoor ski slope, a honeymoon suite with a live whale shark, the flamboyant Plastik club that billed itself “Exclusively For The Filthy Rich And Aesthetically Perfect,” and a beach with underground refrigeration because the sand was too hot..

Dubai turned out to be a nightmare for many. Here's the story of a couple from Canada:

Karen Andrews can't speak. Every time she starts to tell her story, she puts her head down and crumples. She is slim and angular and has the faded radiance of the once-rich, even though her clothes are as creased as her forehead. I find her in the car park of one of Dubai's finest international hotels, where she is living, in her Range Rover. She has been sleeping here for months, thanks to the kindness of the Bangladeshi car park attendants who don't have the heart to move her on. This is not where she thought her Dubai dream would end.

Her story comes out in stutters, over four hours. At times, her old voice – witty and warm – breaks through. Karen came here from Canada when her husband was offered a job in the senior division of a famous multinational. "When he said Dubai, I said – if you want me to wear black and quit booze, baby, you've got the wrong girl. But he asked me to give it a chance. And I loved him."

All her worries melted when she touched down in Dubai in 2005. "It was an adult Disneyland, where Sheikh Mohammed is the mouse," she says. "Life was fantastic. You had these amazing big apartments, you had a whole army of your own staff, you pay no taxes at all. It seemed like everyone was a CEO. We were partying the whole time."

Her husband, Daniel, bought two properties. "We were drunk on Dubai," she says. But for the first time in his life, he was beginning to mismanage their finances. "We're not talking huge sums, but he was getting confused. It was so unlike Daniel, I was surprised. We got into a little bit of debt." After a year, she found out why: Daniel was diagnosed with a brain tumour.

One doctor told him he had a year to live; another said it was benign and he'd be okay. But the debts were growing. "Before I came here, I didn't know anything about Dubai law. I assumed if all these big companies come here, it must be pretty like Canada's or any other liberal democracy's," she says. Nobody told her there is no concept of bankruptcy. If you get into debt and you can't pay, you go to prison.

"When we realised that, I sat Daniel down and told him: listen, we need to get out of here. He knew he was guaranteed a pay-off when he resigned, so we said – right, let's take the pay-off, clear the debt, and go." So Daniel resigned – but he was given a lower pay-off than his contract suggested. The debt remained. As soon as you quit your job in Dubai, your employer has to inform your bank. If you have any outstanding debts that aren't covered by your savings, then all your accounts are frozen, and you are forbidden to leave the country.

"Suddenly our cards stopped working. We had nothing. We were thrown out of our apartment." Karen can't speak about what happened next for a long time; she is shaking.

Daniel was arrested and taken away on the day of their eviction. It was six days before she could talk to him. "He told me he was put in a cell with another debtor, a Sri Lankan guy who was only 27, who said he couldn't face the shame to his family. Daniel woke up and the boy had swallowed razor-blades. He banged for help, but nobody came, and the boy died in front of him."

Karen managed to beg from her friends for a few weeks, "but it was so humiliating. I've never lived like this. I worked in the fashion industry. I had my own shops. I've never..." She peters out.

Daniel was sentenced to six months' imprisonment at a trial he couldn't understand. It was in Arabic, and there was no translation. "Now I'm here illegally, too," Karen says I've got no money, nothing. I have to last nine months until he's out, somehow." Looking away, almost paralysed with embarrassment, she asks if I could buy her a meal.

She is not alone. All over the city, there are maxed-out expats sleeping secretly in the sand-dunes or the airport or in their cars.

"The thing you have to understand about Dubai is – nothing is what it seems," Karen says at last. "Nothing. This isn't a city, it's a con-job. They lure you in telling you it's one thing – a modern kind of place – but beneath the surface it's a medieval dictatorship."

For the full article from the English newspaper, the Independent, click here.

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