Having noticed lately that Paul Krugman and his ilk were spending some time trying to rationalize the move in gold, I had planned to comment on it. Economist Robert Murphy beat me to it, and hits the economics of it in a much more robust way than I could have. The link below to his article at mises.org does a great job of capturing the incomplete tale that is spun when the Keynesians try to rely strictly on low real interest rates to explain it away.
http://mises.org/daily/5652/Why-Are-Gold-Prices-So-High
Certainly, gold should do well when you have negative real interest rates. But, to ignore the currency debasement policies that have become global, the strife in Europe, the uncertainty here, the role of gold for thousands of years, it is, to say, a little misleading to create a model that only focuses on the former.
