Gold: The Next Bubble

[Indy Coug]

http://thegoldbubble.blogspot.com/

[byu71]

http://thegoldbubble.blogspot.com/

I don't know if it is or isn't. However, Glen Beck reminds me of Howard Ruff. Both LDS guys proclaiming the coming "ruff times". Of course Beck has a much bigger following than Ruff.

I also can't remember if Ruff was political or just calling for financial doom.

You don't have a chart you can put up that goes back to 1978 do you.

[Indy Coug]

You don't have a chart you can put up that goes back to 1978 do you.

You mean back when gold was last around $1,000 an ounce?

[byu71]

You mean back when gold was last around $1,000 an ounce?

I thought it hit that price around 80-81, maybe even '82. I will go look.

The only reason I asked to to bring up a chart is because I don't know how to copy and paste one or I would have done it.

[Indy Coug]

[happyone]

I don't know if it is or not, but it seems that every other ad on conservative talk radio, I admit I listen to Bill Bennett in the morning and Michael Medved in the afternoon on my commute, and FOX business seems to be touting Gold. That makes me suspicious

[Indy Coug]

I don't know if it is or not, but it seems that every other ad on conservative talk radio, I admit I listen to Bill Bennett in the morning and Michael Medved in the afternoon on my commute, and FOX business seems to be touting Gold. That makes me suspicious

Exactly. There are several reasons for a bubble, but one of them undoubtedly is due to speculative pressures and because gold's annual returns are kicking the crap out of the market.

[byu71]

Thanks Indy. One thing about bubbles, they can continue a long time after they should. When the Comp Index hit 4,000 it was probably a bubble, but went on up to 5,000.

The one thing I have found during a bubble is the saying, "this time it is different". When I was looking up prices on google I hit an article on why this time is different than the gold high in the early 80's.

[beefytee]

A good article on how valuable gold is currently:
http://money.cnn.com/2010/01/06/pf/b...ymag/index.htm

It's not like it is oil or food or something that is in high practical demand. Even silver has more practical industrial use than gold, even though film use has gone down.

The only thing keeping gold up is its history as a valuable material and a safe investment.

If you are going for a safe tangible investment, I think oil should be it. It will always have a practical use and it doesn't go bad. i.e. it is fine just siting there for a long time.

Copper might be another one that seems practical to me.

[Indy Coug]

The dollar has been weak, but what happens if/when the Euro collapses? Does the devaluation of the dollar become muted by the devaluation of other major currencies? If so, does that undercut the increase in gold prices?

[pellegrino]

I'm not sure what to make of gold. It's definitely looking like a bubble, but demand has decreased in Q1 of 2010 from what it was in Q1 2009 and yet the price has increased almost $500 since then. Its fundamentals have been screwy for a long time and it's clear that the market is being driven by emotional factors. Another factor is the weakness of the dollar right now, which again creates an element of fear.

I think it will come down, not to $400 an ounce, more likely to $600 which would probably be more in line with inflation, but I don't think the bubble is fully inflated yet, mainly because people are very jittery about the market.

If you're interested in interesting commentary and real time prices look at www.kitco.com and read Jon Nadler's column. He seems to be more rational and cautious when discussing the gold market.

edit: I just looked at Nadler's column for today. The title is "Baubles Sell, Bubbles Swell." He's always got a catchy title, or at least he tries for them.

[beefytee]

The dollar has been weak, but what happens if/when the Euro collapses? Does the devaluation of the dollar become muted by the devaluation of other major currencies? If so, does that undercut the increase in gold prices?

Since no one else has taken a stab, I will venture a guess:

I think it has very little relation. Sure more people will go with US dollars that may have been Euros before, but if the US looks shaky too, my guess is most of that money goes into commodities or elsewhere.

Of course I'm no expert.

[Uncle Ted]

If you are going for a safe tangible investment, I think oil should be it. It will always have a practical use and it doesn't go bad. i.e. it is fine just siting there for a long time.

Copper might be another one that seems practical to me.

And guns.

[beefytee]

I'm not sure what to make of gold. It's definitely looking like a bubble, but demand has decreased in Q1 of 2010 from what it was in Q1 2009 and yet the price has increased almost $500 since then. Its fundamentals have been screwy for a long time and it's clear that the market is being driven by emotional factors. Another factor is the weakness of the dollar right now, which again creates an element of fear.

I think it will come down, not to $400 an ounce, more likely to $600 which would probably be more in line with inflation, but I don't think the bubble is fully inflated yet, mainly because people are very jittery about the market.

If you're interested in interesting commentary and real time prices look at www.kitco.com and read Jon Nadler's column. He seems to be more rational and cautious when discussing the gold market.

edit: I just looked at Nadler's column for today. The title is "Baubles Sell, Bubbles Swell." He's always got a catchy title, or at least he tries for them.

In my claims, I'm not saying that gold won't go up in the future. I'm just saying I personally don't see the value of gold especially in a tough economy when people are less likely to buy jewelry. It is pretty obvious that most people who currently own gold or are looking to buy it don't have my same opinion.

[beefytee]

And guns.

I have a co-worker you likes to say "Invest in Guns and ammo."

He is half-joking.

I guess it is the ultimate hedge.