I know what you’re thinking.  Is this another story about how “shiny” gold has been in 2010?  Well, to some extent, yes, that’s exactly what this is. 

But hopefully, I can also deliver a simple, yet sound perspective on why the value of gold will likely keep glittering for years to come. 

Let’s start with the obvious:  The price of gold, as measured by the ubiquitous SPDR Gold Trust (NYSE:GLD), is up 26% this year, as of Wednesday. 

More importantly, over the past three years gold is up nearly 70%, and if we look at the past five years, it has risen more than 177%.  That equates to a five-year annualized return of slightly more than 22%.  Not too many other asset classes have delivered that kind of consistent performance.  Basically, if you’ve been long gold virtually anytime over the past five years, you’ve made some very good money.

Despite the fact that gold prices are at all-time highs, adjusting for inflation, they aren’t anywhere near where they were three decades ago.  In fact, if you take the old high hit in gold back in 1980 and adjust for inflation, gold should be over $2,000 an ounce right now. For purposes of the GLD ETF, that would be over $200.

But the reason gold likely has more room to the upside is simple:  Central banks around the world are printing more and more money.

The Federal Reserve’s quantitative easing schemes — both part I and part II (QE2), and the willingness expressed to enact part III (QE3) — as well as the actions taken by Britain and other central banks around the globe still trying to “stimulate” their way out of economic hardship, are essentially debasing the world’s fiat currencies. 

This debasing of the dollar and other currencies is essentially a built-in call option on gold — whenever you print money investors will look for a refuge, and what better refuge than a physical commodity that’s hard to extract, effectively finite in quantity and that’s widely regarded as a de facto hard currency the world over?

Sure, there will be trading ups and downs in gold just like there are in any investment vehicle  And no doubt at some point the golden bubble will burst, and traders and investors will seek out another source of refuge from the pernicious policies of print-happy central bankers around the globe.

That day hasn’t happened yet, and until it does, look for gold to keep moving higher.