The age of gold is not over just yet

Until the rising reserve powers of Asia, Russia, and the Gulf regain trust in the shattered credibility of the world's two great fiat currencies - if they ever do - gold is unlikely to crash far or for long. "Peak gold" cements the price floor in any case.

It has been an unsettling experience for late-comers who joined the gold rush near all-time highs of $1,923 an ounce last September, and even nastier since the US Federal Reserve took quantitative easing (QE3) off the table six weeks ago. Spot gold ended the pre-Easter week at $1,636.

"The game has changed," says Dennis Gartman, apostle of the long rally who now scornfully tells gold bugs that he is just a "mercenary", not a member of their cult. "There are times to be bullish, and times to be bearish … to every season, as Ecclesiastes tells us."

Gold has risen more than sixfold from its nadir below $260 in 2001, that Indian summer of American hegemony, even as global bourses churned sideways, and that precisely is the clinching argument against gold for contrarians. "Gold is far too popular," said James Paulsen from Wells Capital. It has reached a half-century high against a basket of indicators: equities, treasuries, homes, and workers' pay.

Chartists tell us that gold's 100-day moving average has fallen through its 200-day average for the first time since March 2009 - a "death's cross". Ugly indeed, though Ashraf Laidi from City Index says the monthly trend-line remains unbroken.

Whether or not the global economy has really put the nightmare of 2008-2009 behind it and embarked on a durable cycle of growth is the elemental question. The answer depends on what you think caused the crisis in the first place.

If you think, as I do, that the root cause was the deformed structure of globalisation - with a $10 trillion reserve accumulation by the emerging powers, and an investment boom in manufacturing to flood Western markets, disguised by debt bubbles in the Anglo-sphere and Club Med - then little has changed.

In some respects it is now worse. China's consumption has fallen to 37pc of GDP from 48pc a decade ago. The mercantilists (chiefly China and Germany) are still holding on to trade surpluses through rigged currencies, the dirty dollar-peg and the dirty D-Mark peg (euro), exerting a contractionary bias on the deficit states. There is still too much world supply, the curse of the inter-War years. We may face a globalised "Lost Decade", a string of false dawns as each recovery runs into scarce demand, and debt leveraging grinds on.

If so, central banks will have to keep printing money for a long time, and the Asian surplus powers - as well as Russia and the Gulf - will have to find somewhere to park their growing foreign reserves.

"These countries don't want other peoples' paper promises any longer," said Peter Hambro, chair of the Anglo-Russian miner Petrovalovsk. "There is no sign yet that we are returning to a well-balanced and normal financial system. The ECB is accepting bus tickets as collateral and the only way out of this banking crisis will be inflation in the end."

Russia is raising the gold share of its reserves to 10pc, buying the dips. China is coy, but Wikileaks cables reveal that Beijing is eyeing "large gold reserves" to back a global renminbi (RMB).

China's declared reserves of 1,054 tonnes are tiny, though it may be accumulating on the sly. Sascha Opel from Orsus Consult expects Beijing to boost its holdings by "several thousand tonnes" over the next five years to match America's 8,000 and the eurozone's 11,000.

We do not know whether China suffered a 75pc haircut on Greek bonds
- as Norway's petroleum fund did - but it is undoubtedly nursing large paper losses in other Club Med bonds, and the precedent for EMU sovereign default is now established. The eurozone has become a danger zone. Rules are not upheld. Some bondholders are spared, others are not.

Last week's jump in Spanish bond yields to 5.61pc - from 4.9pc a month ago - should puncture the illusion that Europe's crisis has been solved. Eurocrats say premier Mariano Rajoy has stirred up needless trouble by refusing to abide by Spain's original fiscal targets, but the contraction of the Spanish economy had made the targets meaningless.

As it is, Madrid is embarking on fiscal squeeze of 2.5pc of GDP this year, during deep recession, with unemployment already at 23.6pc, and without offsetting monetary and exchange stimulus.

As for the US, its economy is in uncomfortably close to stall speed. The underlying pace may not be much more than 1.5pc. The US Economic Cycle Research Institute (ECRI) is sticking to its recession call, describing the warning signals as "pronounced, persistent, and pervasive".

We will see what happens as markets prepare for the "massive fiscal cliff" at the end of the year - as Ben Bernanke called it - when stimulus wears off and tax rises kick in. Fed hawks are making much noise, as they did in the Spring of 2008, but interest rates are in fact falling in real terms as inflation creeps up, and that may be the biggest single driver of gold prices. "Even without QE3, the Fed is still ultra-accommodative and they are about to reverse this," said James Steel, HSBC's gold guru.

Mr Steel said the "marginal cost" for mining gold is around $1,450. That is when miners leave low-grade ore in the ground. It creates a natural floor of sorts. Besides, "peak gold" is a closer reality than "peak oil", he said. There has been no equivalent to the shale revolution seen in oil and gas. World output has been stuck for a decade at around 2,700 tonnes a year despite a fourfold increase in investment. There are no great finds, no Wittwatersrand this time.

There will come a day when the bullion super-cycle sputters out. My guess is that it will come once Europe's monetary system has returned to a viable footing - either by fiscal union, or by break-up - and once China's RMB becomes fully convertible and takes it place as the third pillar of the world's currency system. We are not there yet.