Reading Dr. Jean Paul Rodrigue's Chart

Stealth Phase - "Smart money" gets in often quietly and cautiously. Prices gradually increase, but often go completely unnoticed by the general population. Larger positions are established as smart money investors start to understand the well-grounded fundamentals and realize that this asset is likely to experience significant future valuations.

Awareness Phase - Realizing the momentum many investors start bringing in additional money in and pushing prices higher. There can be a short lived sell off phase taking place as few investors cash in their first profits (there could also be several sell off phases each beginning at a higher level than the previous one). In the later stages of this phase the media starts to notice.

Mania Phase - Price rise catches everyone's attention and the public jumps in for this "investment opportunity of a lifetime". Floods of money come in creating even greater expectations and pushing prices to stratospheric levels. Fairly unnoticed from the general public caught in this new frenzy the smart money as well as many institutional investors are quietly pulling out and selling their assets to eager future bag holders. The market gradually becomes more exuberant as "paper fortunes" are made and greed sets in. At some point statements are made about entirely new fundamentals implying that a "permanent high plateau" has been reached to justify future price increases the bubble is about to collapse.

Blow-off Phase - A trigger arrives and everyone roughly at the same time realizes that the situation has changed. Confidence and expectations encounter a paradigm shift. Many try to unload their asses to a greater fool but there are few takers; everyone now expects further price declines. Prices plummet at a rate much faster than the one that inflated the bubble. Many over-leveraged bag holders go bankrupt, triggering additional waves of sales. The general public at this point considers this sector as "the worst possible investment one can ever make". This is the time when the smart money starts acquiring assets at bargain bottom prices.

So, in the rarest of rare likelihoods that gold is pursuing the path of turning into a bubble, using Dr.Rodrigue's chart, we could be staring at only the "Awareness Stage" in future.

Earlier, we noticed some smart money enter the gold market, creating big positions and using much of the declines to increase allocations. This current stage we are in looks like the Stealth Stage. 

Currently, trends observed reveal a lot of institutional participation coming in - central banks are adding gold to their reserves, while institutional participants like pension funds, wealth funds are considering allocations to gold.

The interest in gold doesn't yet qualify for the mania stage, since public participation hasn't been much to speak about, and nor has the media gone gung-ho about gold being the only asset one should invest in. And contrary to bubble behavior, the increase in price has been a gradual and steady appreciation over a number of years. At the most, we just have seen some smart retail money allocate to gold considering its strong fundamentals.

If at all, this bull market is following course of being a bubble then we still are way off from reaching the new paradigm. Gold investors can continue to sing as strong fundamentals suggest that we are in a bull market which is currently nowhere close to being a bubble.