What ho!

The price of gold just keeps going up. It rose $2 again yesterday, to close at $1,310. The Dow fell 22 points.

We’ve been waiting for a sell-off…for a downturn…for a resumption of the “risk off,” fear-driven markets of 2008-2009. It should be coming. People are still unemployed. Stocks still aren’t cheap. And houses are still getting cheaper.

The latest Case-Shiller reading signals renewed weakness in the housing market. Prices are falling again. How much farther will they go? Maybe 10% down. Maybe 20%. As we discovered on a recent trip to Florida, you can already get properties discounted 75% off their peaks. How much more is left?

Probably not much on that one. But most houses are down only about 20%. They’ve got a ways to go.

And stocks? We should see them selling at P/Es close to 5…not the 15-20 that they’re at today. So stocks have a long way to go too.

But Mr. Market always has his tricks. What if he’s preparing a run on the dollar…and a big blow-off in the gold market…BEFORE the sell-off in other assets? We expected stocks to go down…then, gold to go up. What if it happens the other way around?

What if the final stage of the bull market in gold has already begun? What if investors and speculators begin to panic out of the dollar now? What if they sell the rumor of quantitative easing…rather than wait for the real thing? What if they drive the price of gold up to the moon, without giving us another chance to buy more at a lower price?

Anything is possible. Mr. Market is a cagey, son of a gun. He could do anything. We wouldn’t put it past him.

Still, we wouldn’t bet the farm on it either.

Investment pros seem to be turning bullish on gold.

“Gold forecast to hit $1,450 an ounce,” says a headline in The Financial Times.

That’s the consensus view from the precious metals industry.

“It’s hard to be pessimistic about gold in the short term,” said Kevin Crisp, chairman of the London Bullion Market Association. “At worst, you’re neutral.”

We’re seeing more and more bullish forecasts for gold. But so far, actual gold holdings by institutional investors attending the aforementioned LBMA conference are still tiny…less than 5% of their portfolios.

As for individual investors, they’ve scarcely even heard of gold. Few own any at all. When they get on board – it will mean huge new demand for the metal.

And there are the central banks. They have been net sellers of gold for many years. Typically, bankers are the worst investors in the world. They buy high and sell low. Someone should tip them off; that’s not the way it’s done. But they dumped beaucoup gold just as it was hitting all-time lows in 1998-99. And now that it’s 5 times as expensive, they’re beginning to buy again.

When they really start buying, we’ll know the game is over; it’s time to get out of gold. But for the moment, they’ve barely begun.

The biggest buyers will probably be the emerging economies. Why? Because they don’t have much gold. China has only 1.6% of its reserves in gold, for example. And because they’ve got the paper cash to buy it.

China could be a major buyer for 10-20 years…and still have a relatively small percentage of its reserves in gold. So could India. And Brazil. And Russia.

So, maybe Crisp is right. Maybe it is hard to pessimistic. But so many people are so optimistic…we can’t help but wonder: what’s Mr. Market up to? What devious, devilish, infernal brew is he concocting?

We’re not pessimistic on gold. Far from it. We expect the price to go to $3,000…or $5,000 before this is over. But it bothers us that so many others think so too.

It would be just like Mr. Market. Get the Johnny-come-latelies into gold. Whack them hard. Then, take gold much higher.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.