you have to understand that Gold went "sky high" after Nixon announced that the US is officially no longer on the $35/oz Gold Standard. That's when Gold started to really rally as the World has lost faith in the USD back then.
As with any market that takes off, speculation became part of it. Fast forward to 2008 and we had Gold already reach over $900 per oz. From less than $300 about 7 years ago...it's an indication that the demand for gold went up - as a result of people once again losing trust in that currency.
How is this time different than 30 years ago? We now have 11trillian in debt ($50+ Trillian when including promised debt), we are now in the BEGINNING of the probably worst financial housing bubble the US ever has experienced and the "printing presses" / "creation of new money" are running at a high rate.
As with every market though, speculation will once again become part of this Gold/ Silver market. Right now we are still very far away from that point but there will come a time when it's best to exit the Precious metals market and start investing in the blue chips stocks and housing. But before that day comes I expect the masses to invest and talk about gold mining stocks.
Gold cannot really be seen as a "live " indicator of inflation at all times. As every financial market, precious metals also experience cycles. And speculation can amplify those cycles. Yes, Gold came down hard from the $780 high ($850 spike) in the eary 80s - but take a look what it was before that time...fixed at $35/oz. I suspect though, that this cycle will make the other cycle in the 70s/early 80s look like foreplay.
