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Will Global Easing Create a Gold Bubble?

As more countries adopt monetary stimuli for their economies, the devalued currencies have created a runup in physical gold demand, according to State Street's Chris Goolgasian.

Ben Johnson: I'd like to get your take on what is everyone’s either favorite or least favorite real asset, which is gold. You’ve written pretty extensively about gold in your thoughts and your thesis on investing in gold. Given that the gold price has really taken quite a pounding here--recently we’ve seen massive outflows from a lot of gold-holding exchange-traded products--what's going on in the gold markets? Is your long-term thesis still intact?

Chris Goolgasian: Very good question. And it certainly seems like gold is being priced largely off of quantitative easing talk. We think that that’s incorrect. We think that longer term--and you've started to see this even in the last few weeks--that the market narrative around gold is going to move to be a global discussion and not a U.S. monetary discussion. The very short and direct punchline that people say when gold goes down is quantitative easing is going to slow, the dollar is going to strengthen, and gold doesn’t do well in that environment. And that is the narrative that has existed as gold has fallen.