Correlations are only good as long as future conditions remain similar to past conditions. No mathematical model predicted what happend last fall, otherwise the big, fat banks would not have suffered the way they did. So people who want to predict the future of gold based on the past, inherently assume that nothing will change.

Right now Obama is in his honeymoon and probably will be granted a few weeks of relative stability. No major government will do anything drastic to hurt relations, even Israel pulled out of Gaza just in time. Also, I think goverments are stunned by what has been happening and have enough with their own internal problems. However, this nice period may end and then all predictions are off.

Predictions are very difficult to make, in particular those of the future.

Fundamentally, the US is bankrupt and nothing except a major drop in the US dollar can make it competitive. They are in the lucky position of having all their debts in US$ so they can inflate their way out their debts. As long as the US$ is the world currency things can go on, and probably will for some time. The 'lucky' situation for the US is that Europe is in no better shape and China is too new at that level.

China, not only do they produce and consume more than 40% of world cement and steel to build the country, they plan to build new huge cities equivalent at a rate of 4 Torontos per year! What has also changed is that they are getting awfully well educated, both from abroad and from within. Technologically, they are getting there and probably pretty soon they will switch from being the guys who copy blueprints to those who actually lead lots of developments.

When China and India become big consumers they will depend less on the US to buy their goods with US$ and real problems for the $ will occur. Time line I can't predict, but bottom line is that the US$ will drop and the gold price will rise in US$, this is a no brainer.

Of course, major issues related to the world fossile fuel supplies(oil and gas for now) can throw any prediction off(by a mile)