Goldmining stocks have badly lagged the rest of the market, so maybe there's a case they're undervalued.

After all, the gold price has almost doubled in five years.

But thanks to overblown promises, poor mine management and no accountable connection between how much is mined and the profit reported, maybe they're not undervalued after all.

Especially when they've been squeezed more recently by a lower gold price, stronger dollar and rising costs.

Mind you, that's just the producers. The sweet spot for gold stocks seems to be after a mine is developed but before it starts producing.

Anyway, investors globally have been shunning goldminers for exchange-traded funds of bullion. These are to the market what sliced bread is to toast. They trade like an ordinary mining share except instead of finding and digging it out, the gold is already safely tucked away in a bank vault somewhere, neatly resolving the problem of where you'd put a bar of bullion.

But they're also sucking the oxygen out of mining stocks. John Paulson and George Soros, the world's wealthiest hedge fund managers, have been pouring money into gold funds.

Since you can't do much more with gold than perhaps polish it, its true value is unknowable, especially when so much is held by central banks. It's dug up, only to be buried again.

Germany's Bundesbank, the world's second-biggest bullion hoarder after the US, even withdrew some of its gold from the Bank of England and melted it down to make sure it was all there.

Thank goodness it was. Central banks not trusting each other would be eerily reminiscent of the GFC. Look what happened then.

The thing is, there's a lot of political pressure on the Bundesbank to bring Germany's gold home, showing Germans are worried about another financial crisis. Meanwhile, other central banks apart from ours, which was one of the earliest sellers, are buying more gold.

And so bullion bulls can't for the life of them understand why gold isn't already at $US2000 an ounce, which in today's dollars would still be well below its peak more than 30 years ago. Bears can only see a bubble in something that doesn't feature prominently in economic growth.

But the way the world's currencies are being debased by each central bank hitting the note-printing presses - leaving our Reserve Bank a paragon of virtue and rectitude, something I don't often say - should be a godsend for gold. It's an alternative currency, so if the paper ones are devaluing, it should be appreciating.

Because interest rates are negative after taking out inflation, it costs speculators nothing to borrow and push up the price of gold.

Yet as the money-printing has been stepped up, the gold price has been drifting in what should be its finest hour. That there's no hyperinflation, or not even much ordinary inflation, is quite the inconvenience.

No, gold's prospects boil down to where the US economy, and so the US dollar, are going. Which seems to be up, so the best hope for gold is a panic over the political standoff on lifting the debt ceiling so the government can pay its bills. That can be arranged.

Still, eventually it'll come down to which gets in first: inflation, or gold's worst enemy, higher interest rates.

Twitter @moneypotts