It is still a wicked, delightful world.

Again this week, the price of gold bubbled over $600 and contracts with a June delivery date came to rest yesterday at $599.40. We began our Trade of the Decade in 2000, with a gold price below $300. Now, the decade is more than half finished. The price of gold has doubled.

We have nothing to complain about. We could sell now and take our profits; it almost seems ungrateful to expect more. But, Daily Reckoning readers pose us a question: What to do now? Today, we throw the question right back at them.

While the rise in the price of gold is delightful to those holding the yellow metal, to many wicked people in many wicked places, it constitutes an attractive nuisance. Like oil, it is in wicked places that reserves tend to be found - and it is wicked people who tend to govern them.

At least that is the way it is beginning to look. The last few days have been marred by several elections. While the world's attention was focused on the land of the popes, ours turned to the old homeland of the Incas. For it is in Peru, not in Italy, that mining is big business. There, Newmont Mining, the world's largest miner, has 18% of Peru's gold and copper reserves - and there too it gets nearly 40% of its revenue.

We read the paper along with everyone else. From what we can tell the countries that contain the largest reserves of oil and gold are the very countries that seem to have the most crackpot, unstable, and predatory governments. And, the competition for this distinction is nothing if not intense. Even the government of the world's most enlightened empire, the United States of America, seems to be vying for the title.

Nonetheless, the Nigerians, Iranians, Saudis, Venezuelans - and now, it appears even the Peruvians - are still in the lead. All up and down Latin America, from the tippy tip of Tierra del Fuego to the Rio Grande (and perhaps beyond), nationalists, Marxists, Che-worshipping dreamers and peso-grubbing schemers are tightening their fists. Chavez in Venezuela is squeezing oil companies. Morales in Bolivia is squeezing gas companies. And if Ollanta Humala wins a run-off election in Peru, Newmont Mining is likely to be squeezed, too.

Coaxing the precious stuff out of the grudging ground, under the noses of wicked politicians is one thing both mining companies and oil companies are good at. For both, the work only seems to be getting harder.

"You can't get drill rigs, you can get workers. You can't get skilled workers," says John Hathaway of the Tocqueville Gold Fund. "The time that it takes to put in a new mine is longer than ever. Because of the environmental standards and the hoops you have to jump through on that, some of these things will never get built."

Earlier, we raised the possibility of "Peak Gold" - the idea that gold production is now near its maximum level, and that from here on out new production will be flat or declining - in a previous Daily Reckoning. As is the case with oil, the easy stuff has already been taken. There were gold mines in Virginia in the early 1800s. Then, gold production moved to less hospitable areas - such as California! When that played out, it was on to Peru and deep into South Africa. Likewise, getting oil from Pennsylvania or Texas was a relatively simple matter. Getting oil from Nigeria and Venezuela is another matter altogether.

Peak Oil poses major problems for the world economy. As currently constructed and operated, the world needs oil - and lots of it - just to keep going. As supplies tighten, prices rise. Today's Financial Times tells us that the price of gasoline is likely to be $2.62 per gallon in the United States this summer - 25 cents more than the year before. What will vacationers do...walk the last few miles?

Peak Gold, on the other hand, poses no such problems. The price of gold soars without doing any particular damage to consumers. Most aren't even aware of it.

Will it continue to rise? How high will it go? Those are the questions we can't answer. The only part of history we can read is the part that has already happened. As to the part yet to happen, we are as ignorant as the next man.

But history is a tease. She can't help but raise a hem and drop a hint. Gold hit $850 an ounce 26 years ago. Since then, consumer prices have more than doubled, the Dow has been multiplied 11 times, and debt, in all its forms, has grown faster than waistlines at Wendy's.

"We're all fat, dumb, and happy," says Intel's chairman. We hardly expect any bad luck...let alone any wickedness.

Buy gold, dear reader; buy gold.

*** Last Friday, the monthly jobs numbers were released - what our friend, Chuck Butler, likes to call the 'Jobs Jamboree.' Chuck laughs and all but dismisses these numbers every month, and with good reason. Capital and Crisis' Chris Mayer explains:

"The government, since the time of the Kennedy administration, has been changing the definition of "unemployed." Again, many small changes over time lead to dramatic end results. According to John Williams' Shadow Government Statistics, if you back out the changes, you get an unemployment number closer to 12%!"

*** There has been no change in the dollar/euro ratio for a very long time. Does that mean it is a stable, long-term relationship? Perhaps the two can get married in the church. But, we sense a problem coming. We might have to hold off on the wedding march, for both the euro countries and the dollar states face the same deeply structural problem: Both have made promises they can't keep. The U.S. dollar is far more at risk than the euro. Too many Americans have no savings and count on rising house prices to keep the bills paid. So far, they've been lucky. The rest of the world still takes U.S. dollars in payment of debt - and house prices in America have not yet noticeably declined.

But along comes the National Association of Realtors with talk of a "normalization" of the property market. By that, they mean that they anticipate fewer sales in 2006 than in 2005.

This seems to be what everyone expects - along with a "soft landing" for housing prices and the economy. In England and Australia, housing prices already turned down, but with no obvious economic damage. The great blimp seems to have touched down without even breaking a champagne flute. So, we can stop worrying about the housing bubble. It won't pop, say the optimists; it will merely go down a bit, like a swollen bee sting. In no time at all, the victim's skin with be silky smooth again.
 
Maybe they will be right.

Colleague Dan Ferris even thinks he spies an opportunity. All this talk of housing bubble has depressed the shares of the homebuilders, says he. You can now buy them at what could be epochal lows. KB Homes sells for only seven times earnings. Standard Pacific has a P/E of less than six. Meritage is available for less than seven times earnings.

Of course, if sales go down fast, so will earnings - even faster. Then, these prices may no longer be so cheap. But, Dan thinks they are worth a look, and if the market really did "normalize" rather than fall apart, he'll probably be right.

We have a feeling the American real estate market is long beyond the point where normalization is possible. People depend on taking out equity. When there is no equity to take out, what will they do? They will be stuck, forced to cut back. Then, the consumer economy will cease consuming so much. The trade deficit with China, which just hit another landmark - more than $11 billion in March, twice what experts had expected - will finally shrink like a lumpy sweater. The U.S. economy will go into a slump. Then, we shall see what stuff Mr. Bernanke is made of.

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