With the dollar weakening, debt growing, and the global and domestic economy still sluggish there is pressure driving up the price of gold, silver and industrial commodities.  Forgive me if it just seems too obvious.  Endless ads selling gold, and gold buyers showing up in vacant strip malls makes me skeptical.  What could reverse this trend?

China.

If there is any significant slowing in the growth of China, the demand for commodities will suffer.  Corrections are often steeper than the increases.  Markets can remain illogical for long periods, as we have certainly learned.

When interest rates climb, the holding costs for gold which pays no interest or dividend, goes up and the value declines.

I recall how many in the late 1970’s bought gold at $800 an ounce, thinking that runaway inflation was inevitable. It wasn’t and many lost 75% of their investment. Depending on whether the new Congress has the balls to truly address our problems, gold may indeed be a worthy investment. But do not ignore factors which could easily drive it in the other direction.