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Gold $2000 By 2015.

Last Wednesday the Fed shocked investors with its decision to not to slow down on its bond buying frenzy. Gold, which at the time was already priced on the assumption of a Fed taper, rallied over 4% immediately after the announcement.

A couple days later James Bullard, the Federal Reserve Bank of St. Louis Present, stated that the choice not to taper the Feds 85Billion dollar a month bond buying program was a "close call," and that there is a small chance for a Fed taper in October. This statement from Mr. Bullard sent Gold prices back to its pre-taper levels.

This overreaction in Gold - based on possible future tapers that the Fed has been talking about for years - has been the unfortunate story this year for Gold bulls. The ironic thing is the that the fundamentals for Gold haven't changed at all.

The fundamentals of Gold go back to basic economics. When a central bank prints money, the value of the currency relative to a real asset, such as Gold, decreases. Therefore, it should make sense that the more quantitative easing central banks do, the higher the price of Gold should become relative to that currency. Even though these fundamentals SHOULD be bullish on Gold, the reality is that Wall Street hasn't agreed yet. Times are soon to change.

There are so many signs that the US can't pay its bills, such as the recent debt ceiling debates. Obama states that the reason for raising the debt ceiling is because "America needs to prove to investors that we are good for our debt." The ironic thing is that it's the complete opposite. The reason for raising the debt ceiling is not to prove to investors that the US is good for its debt, but instead to stay out of default. It's hard to understand how investors don't realize this and continue to lend money to the US government. Eventually investors will realize that the US can't pay its bills. This will happen either because of a default (the honest way) or through printing. As soon these artificially low interest rates rise the amount of interest the US will have to pay on its debt will be enormous. The only way to pay of the massive amounts of debt will through printing. As soon as investors realize that the only way the US is going to pay off its debt is through inflating its currency, investors will dump their bonds. This will be the ultimate collapse in the US bond market. Investors will then go to the well known 'safe-haven' Gold. As a result Gold prices will rally way past its current level.

In the short run Gold prices will continue to be volatile, but in the long run, there is only one way Gold prices are going, and it's up.

As a prediction… Gold will reach $2000 an ounce by 2015.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.