David Einhorn of Greenlight Capital, recently speaking of why he’s become a fan of gold, had this to say:
 

I have seen many people debate whether gold is a bet on inflation or deflation. As I see it, it is neither. Gold does well when monetary and fiscal policies are poor and does poorly when they appear sensible. Gold did very well during the Great Depression when FDR debased the currency. It did well again in the money printing 1970s, but collapsed in response to Paul Volcker’s austerity. It ultimately made a bottom around 2001 when the excitement about our future budget surpluses peaked.

Einhorn added, “Prospectively, gold should do fine unless our leaders implement much greater fiscal and monetary restraint than appears likely. Of course, gold should do very well if there is a sovereign debt default or currency crisis.”

David Rosenberg, chief economist and strategist at Gluskin Sheff, also continues to favor gold. The fact that the yellow metal continues to surge higher -- even with ongoing deflationary developments -- suggests that other factors are driving bullion to new bullish heights, he says.

“It’s called scarcity of supply relative to fiat currency,” Rosenberg argues.

The strategist wrote today in a research note that he thinks gold can at least double if not triple from here.

“The cup is still half full -- and still can be filled with gold eagle coins,” he said.

For investment advice about how to play gold, we checked in briefly with Curt Hesler, the longtime editor of the Professional Timing Service newsletter.

Hesler says there's no doubt that long-term gold will reach at least $1600. However, he thinks the near term is still a bit “dicey.” The veteran says he’ll get more excited about buying gold at $950 to $960.

In terms of the mining shares, Hesler has been patiently waiting for chances to pounce. Recently, he found a window of opportunity, and bought Kinross (KGC) and Agnico-Eagle (AEM).

We also asked Dr. Scott Nystrom, editor of the Gold Stock Strategist newsletter, for some help.

He thinks gold is going higher, hitting $1200 next year. However, he’s quick to add that it’s now possible we experience a correction in the short term.

“I would hold off on buying gold here, but I would go to gold stocks, which are lagging,” Nystrom says. “For conservative investors, look at Barrick, Newmont Mining (NEM), Yamana and Eldorado Gold (EGO).”

He adds, “If you want a solid junior, look at Jaguar Mining (JAG).”