Gold has been holding above $1,300 per ounce for the last couple of days.  This is a new nominal high.  It continues to be a tug-of-war between the gold market and the bond market.  Interest rates remain low, which means bonds remain strong.

The bond market may see trouble ahead, but it isn’t inflation trouble.  The gold market also sees trouble ahead, but it sees more inflation and weakness of the dollar.  One of them will win out eventually.

Bonds could easily win out in the short-term.  If there is another stock market crash and another panic, people may flock to “safety”, which to many means bonds.  The reason “safety” is put in quotation marks is because bonds are not necessarily safe, especially with the threat of higher inflation and higher interest rates.

Ultimately, the gold market will win out.  The federal government is so far in the hole, that it is likely to default.  Whether it defaults outright by repudiating the debt (unlikely in the near term) or it defaults by creating money out of thin air (more likely), it will not be good for the bond market in the long-term.  While there are no guarantees, gold is a better long-term bet.