Skip to comments.Gold, The Next Bubble?
Posted on 09/17/2009 8:16:32 PM PDT by h20skier66
"Whether through exuberant hedgies or anxious private investors, gold just keeps pushing higher..."
SO SPECULATIVE BETTING on gold going higher now equals a record-busting 752-tonne position in Comex futures and options, yet this is not a bubble according to Michael Pento of Deltaga.
Let's say otherwise. Let's say that gold prices, surging by almost $100-per-ounce in barely a month, are very much in a bubble...blown up by near-zero interest rates worldwide and a sharply negative cost of borrowing after inflation. Were that the case, the question before potential and existing investors would be simple:
Is this "irrational exuberance" or a "permanently high plateau"?
Alan Greenspan applied the former to US price/earnings in Dec. 1996; Irving Fisher said the latter of US equities in Oct. 1929. Both were looking at what history would decide were clearly bubbles in hindsight. But Greenspan was three years and 105% early.
Fisher spoke less than 72 hours before the Great Crash began...
(Excerpt) Read more at commoditynewscenter.com ...
You can’t eat or burn it and the day approaches when you can’t spend it. I hope Soros is long on it.
Fine rifles, on the other hand...
I Think the bubble is paper
Yes, the hype is getting up there.
I agree.....historically it’s overpriced when compared to silver...the gold to silver ratio right now is like 60 to 1, whereas the historical ratio is 16 to 1......I’m sick of hearing all of our conservative talk show hosts push gold....they are not experts in metals, so they shouldn’t be pushing it to the listeners they supposedly value. the only thing worse is Hannity plugging GM.
I think Gold will fall slightly, and silver will rise greatly.
silver is over 17 now.
There are plenty of goldbugs on FR also. They’ll be here shortly to tell you how wrong you are. They were busy attacking me yesterday on another thread.
I prefer silver bullion (I’m not rich), because in the event of a monetary collapse it is akin to smaller denominations, i.e. more spendable.
Back to gold, it may bubble out now, but as a currency collapse gets closer, and it will, you may view it differently. I am of the opinion that governments may be forced on to a gold or precious metals standard in order to make the paper currency usable.
You want to know the biggest ugliest bubble getting closer to popping? US Treasuries. We have the Fed printing money to buy the notes used to pay the interest on the money the Fed is printing and “loaning” to the federal government. The abject absurdity of this is so ludicrous that no one can bring themselves to admit out loud that the “full faith and credit” of the US government is not on par with a $50 hooker’s promises.
Something will have to back our currency, there is certainly nothing behind it now.
How about land? I saw two full busloads of Chinese people in Havre, Montana, last October. There's nothing there.....but farmland.
I don’t prefer bullion per se but rather junk silver. Silver American coins that are recognized as money and are in convenient proportional units.
Oh I hope so and I hope it catches all those anarcho-capitalists gold standard types flat footed.
parsy, who is being mean
I could never understand this gold thing. No amount of gold will buy you food when our economy tanks. The only way to survive in that environment is to grow/kill your own food and barter.
Randi Rhodes is plugging it on her show.. so its a pox on them all...
By the way, the capital gains on gold is 28%! Nobody tells you that on the radio....
Paper fiat currencies are in bubble territory. Gold is up 10% in a month, and that’s a “bubble”? Hardly.
But if gold looks good, silver looks positively ready to explode.
Well, as for myself, I am not a gold-bug, and I am certainly not here to tell you how wrong you are. I only wish to offer a slightly different perspective:
When the SHTF, what will you need?
Food? Definitely, but you can only put so much investment into food before you find yourself in a position of having to defend it.
Guns & Ammo? That will help protect any stash of food for a time, but how long? Just ask the Branch Davidians how the fortress-option worked out for them.
Real Estate? That would also help with the Food issue, but again, you have to defend it.
Now, think about something that has been considered a form of currency since the dawn of civilization; something that is so precious that you can almost hold the equivalent of an entire house in one hand; something that you truly can ‘take with you’ if you need to move to another locale on a moment’s notice.
What did I just describe?
I am not suggesting you put everything into precious metals, but I think every survivalist should have some on hand —the key element being physical possession.
Don’t know what will be the most negotiable form of silver, but it looks to be the most practical metal for a medium of exchange when (not if) we have a currency collapse.
Now, if we end up in a state of anarchy, who knows? Food stuffs and water could be the medium of exchange. Can’t do everything with barter.
Anyway, it will be something besides paper money, you can bet on that.
Silver is good, too.
The only issue I have with silver is that it does not carry the same proportionate value per ounce. Please note my earlier posting on portability.
With silver, you would have to carry a pretty big box to equal the same investment you would have in a single gold coin. An overly-large investment in silver puts you in the same position as would an investment in Real Estate —you have to defend it.
As for Platinum and Palladium, their primary value is due to their use as industrial metals, and I do not consider them to be appropriate for survivalists.
Your gold will only be able to do so much. Don’t forget:
Ezekiel 7:19 (New King James Version)
They will throw their silver into the streets, And their gold will be like refuse;
Their silver and their gold will not be able to deliver them
In the day of the wrath of the LORD;
They will not satisfy their souls,
Nor fill their stomachs,
Because it became their stumbling block of iniquity.
You can’t eat the dollar and it doesn’t burn well. And when the sh!t hits the fan, they won’t be worth squat. Meanwhile, gold will still be traded.
As for why gold has gone up... That’s simple. It hasn’t.
After going from $800b to $1.8 trillion dollars in cash... The dollar is decreasing in value
if gold was at $700 an ounce before dilluting the dollar, then it’s only natural for it to double if the cash supplied is doubled. And that’s without adding in all the other stupid things the admin is doing.
But in Zimbabwe they have taken up trading food for gold - and they are in a crash situation worse than anything. Because the currency is worthless, youths pan and dive for gold in the rivers, getting little specs and nuggets, each worth a lot when exchanged for loaves of bread.
Good point. Also the dollar index is down 5% vs other currencies so gold is really up closer to 5%. The S&P500 is up 9% and Nasdaq 10%, so gold being up 10% doesn’t seem to be bubbling over.
There is a lot of consumer hype surrounding gold, but even if 1 million Americans buy 10 ounces of gold per year, it’s still less than the European central banks sell each year.
Thus fewer than a hundred crusty Europeans can do more to artificially depress the price of gold than the hype of a million American “survivalists” can do to artificially raise the prices.
As long as governments keep printing money to pay the bills, gold will keep rising. The rise in gold will only be nominal, rising relative to the price of commodities and goods. The only thing that can stop this from happening is if central banks and governments ban gold altogether.
Later reading. Good night.
Very well put! I can agree with all that you wrote.
I've heard that there are canadian dealers who do not report transactions to our I-R-S.
Yes, the hype is getting up there.
Lets review why gold is NOT in a bubble:
- Nothing can be in a bubble unless it is well past the previous inflation-adjusted all-time high
- Gold regularly drops up to ten percent in three days or less and once dropped more than twenty percent nearly without a break in 2008. Bubble price action goes one way.
- In every case, gold corrections have taken weeks and months to recover. Bubble price action is exponential not a grinding, grudging recovery.
- It is almost a commodity, yet supply is not readily available. Thats a supply shortage, not a bubble.
- Boiler-room companies (i.e. cash4gold) are begging the masses to sell to them, not to buy from them
- CNBC is still bashing goldbugs instead of worshipping them
- We havent seen a TIME or Business Week magazine cover with a cartoony John Q. Public engaging in borderline-sexual acts with Lady Liberty from the Saint Gaudens Double Eagle
- Nobody you know, knows what Lady Liberty from the Saint Gaudens Double Eagle looks like
- Hollywood hasnt yet made gold-related TV shows, movies, etc.
historically its overpriced when compared to silver...the gold to silver ratio right now is like 60 to 1, whereas the historical ratio is 16 to 1
They were busy attacking me yesterday on another thread.
No amount of gold will buy you food when our economy tanks.
By the way, the capital gains on gold is 28%! Nobody tells you that on the radio...
Their silver and their gold will not be able to deliver them
There is a lot of consumer hype surrounding gold, but even if 1 million Americans buy 10 ounces of gold per year, its still less than the European central banks sell each year.
Being called a troll is NOT a reasoned critism. And it was “you” who made that remark.
I don’t really care personally as I am not the one going down when the gold fever subsides.
Being called a troll is NOT a reasoned critism.
The last word is yours if you wish.
You remember how they used to say that:
“they’re not making anymore land”
In order to convince themselves that housing prices wouldn’t crash....
The same talk show host pushed adjustable rate mortgages just a few short years ago.
It’s funny, ok! What’re you gonna do about it punk!
Every bad investment was previously touted as good. That doesn’t make all things touted as good to be bad, ok?
Who’s saying that?! I just know hype when I see it.
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