Skip to comments.Are we in a Gold Bubble
Posted on 04/19/2006 11:08:46 AM PDT by Jim Verdolini
Are we in a Bullion Bubble? Gold and silver are rocketing to new highs. Look at the trend:
Monday Gold was over $604 and silver $13.33. By the end of the day Gold was $618. Tuesday it was Gold $620 and Silver $13.55. This Morning Gold $624.90 and Silver $14.16. Right now Gold is $632.70 and Silver $14.54!
I have read that there are two major things, in addition to oil prices, causing the rise. For Gold it has to do with a rumor that China plans to convert a small bit of their dollar reserves to Gold. For silver, there is a rumor that the metal will be traded differently and more vigorously. If China was to convert only 3% of their dollar reserves to gold, that would be the entire worlds production for a year!
I bought my wife a small gold crucifix last month. The chain supporting it was so frail that it broke in less than 2 weeks. I replaced it with a more serious chain and the store gave me a $20 credit on the flimsy old chain that weighs about nothing.
Nope, we are watching the slow death of fiat money. Short term, sure its probably run too far too fast, but expect 4 digits in the gold price in the not too distant future.
No! Gold is undervalued! Buy more now!
I hear that Gold.com is going for 1,527.38 and is expected to increase another 152% this week!
I have a special program for people who want to magnify that gain so that their $1,000 investment can generate $100,000, you heard right! $100,000 in returns by Tuesday! Next Tuesday!
Do you want to be rich? Isn't it only fair that you retired in the Caribbean by May?
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< / bubble>
The GoldBugs are going to bite you!
Gold's value always stays about the same - it's the currencies that are deflating.
Probably true. I bought my small reserves a year ago when it was about $440 an oz. It is fast becoming too expensive to buy. Silver is another issue. One can buy a lot of $14 silver if one believes it is going to go way up.
Good collectable specimen gold and gold/quartz has been at that price for years.
Nope, a collapse of the dollar I would say.
This country has to get off it's lazy arse and start creating items of value.
Imagine what it is like now as a result of being bitten when the price was $290.......
Time in a gold thread before mention of fiat money (ooooooh!): 2 minutes 37 seconds.
"we are watching the slow death of fiat money"
Agreed, this has been predicted years ago only to be po-pood by the elite fund managers.
Hey, anybody know where Greenspan is?
"This country has to get off it's lazy arse and start creating items of value."
I always thought Alfa Romeo money was sportier.
Did you buy and hold since $290?
Good for you. Most would be trading.
I agree 100%.
Are we about to see the formation of a perfect storm of huge trade deficits, devaluing dollar, housing bubble, Iran, rioting Mexicans, budget deficits (+ Lord knows what else)?
The Asians with their new found wealth are the reason the commodities markets are climbing quickly. One only needs to look at the price we are paying for gas. People it is not that gas is going up. It is the fact that your dollar is becoming worth less. Anyone look at the prices of gold, silver and copper lately?
"More than half of all industrial goods are made in its factories. The production and export of these goods, their prices kept low by Beijing's manipulation of the renminbi currency, has generated the cash behind China's growing economic power."
But we do create things of value, we just do it in other countries...hehehe
Hot air like that was spewing vigorously when gold rose through $300. It became rabid hot air as gold worked its way up. Lately, the hot air has cooled a bit as the turkeys stutter to explain gold's relentless climb. I may take my gold profits, but only when the hot air ceases and the turkeys start buying gold. For once, I got in at the bottom of a bull market. It feels great!
Cisco. Broadcom. Qualcomm. Krispy Kreme. But gold is different.
Supply and demand? The demand is from hoarding.
All your fiat are belong to us!<\b>
Biggest buyers of gold are orientals and middle easterners. I wonder what is going on in those areas that might make them want to buy gold?? Seen this before. My guess is a lot of the new wealth of China is being stored in gold (ditto) middle east. That, to my way seeing it is not a bad move on their part. These guys tend to buy alot of US Treasuries, but with the current yield and the currency risk they probably feel safer in gold. Also, buying bonds leave trails that central governments can observe, while gold can be hoarded.
The good thing about that perfect storm is that it will break right about the time Hillary steals, um I mean wins, the next election. It could mean the end of Demo presidents for years.
Never is a loooong time. Fiat is relatively young in this country. It won't come without major pain, so I am not really wishing for it, just being prepared.
Naw, you want Ferrari or Lamborghini money if you want sporty...
"The demand is from hoarding."
That's to limited, look at silver, copper, lumber, crude, energy, etc., etc., etc. Party is over boys, real problems that must be dealt with quickly.
About to see? Dunno. Timing these things is a fools errand. But it becoming increasingly obvious that something wicked this way comes.
When you are a rich despot like saddam, it pays to have a little gold around. The old iraqi dinar is not going to buy much. The chinese still remember when the commies took over. Unless you owned portable, stable wealth, you were out of luck.
I have a special program for people who want to magnify that gain so that their $1,000 investment can generate $100,000.
sounds like it should be 1-800-Hillary
There's lots of room for gold to climb.
what was the high, $800 oz around 1980?
What cost $800 in 1980 would cost $2031.73 in 2005.
Also, if you were to buy exactly the same products in 2005 and 1980,
they would cost you $800 and $315.00 respectively.
Remember the Hunt brothers and $50 silver?
What cost $50 in 1980 would cost $126.98 in 2005.
Also, if you were to buy exactly the same products in 2005 and 1980,
they would cost you $50 and $19.69 respectively.
Gold like housing keeps pace (usually) with inflation.
Fun calculator to play with @ http://www.westegg.com/inflation/
The natural resources fund in my 401K is on FIYAHHHHH.
As times grow darker, gold glows brighter.
Now, whether it glows X$ brighter is always the question.
But it's always a comfort to have a little metal in your stash as an insurance bet.
Gold moves like an earthquake. The stress slowly builds, but gold remains constant. Occasional flutters release energy, but the market doesn't move much. Stress continues to build. Everyone sees it building, but no one wants to try to predict a once in a generation move. Having never experienced a major break, the younger folks discount the threat. Meanwhile the pressure keeps building until suddenly the market breaks upward. Those prepared get a memorable ride. Those unprepared get a face full of dust.
LOL, for $200 extra, will you send me "the Evils of Fiat money, die economy die" and the bamboo steamer?
Average car in 1971 cost what? Around 3500.00? That was 80 oz of Gold back then.
Same 80 ounces of Gold today is 51,000.00
The problem, at least for me, is the price has reached a point where I cannot afford my normal monthly Eagle buy. I do not own enough to make a real killing and want to hold what I do have for another 20 years, then take one heck of a vacation. I still want to buy but not at $630....I will have to buy silver, though I do not believe silver has as much room for growth.
Think of a zillion other people in your exact position, and IMO you'll see that silver is far more undervalued than gold.
|Contract Name||Symbol||Months||Tick Size||Trading Unit||Min Fluc||Init Margin||Maint Margin|
|Aluminum||AL||All 12||$0.0005 per pound||44,000 pounds of aluminum||(.05¢) per pound||$1,500||$1,500|
|Gold||GC||All 12||$.10/oz. = $10.00||100 troy ounces||10 pts=$10||$2,362||$1,750|
|Copper High Grade||HG||All 12||0.05 ¢/lb. = $12.50||25,000 pounds||5 pts=$12.50||$3,038||$2,250|
|Palladium||PA||All 12||$0.05 (5 cents) per troy ounce ($5 per contract)||100 troy ounces||5 pts=$5||$2,700||$2,000|
|Platinum||PL||All 12||$0.10 (10 cents) per troy ounce, $5 per contract||50 troy ounces||10 pts=$5||$2,700||$2,000|
|Silver||SI||All 12||$.001/oz. = $5.00||5,000 troy ounces||50 pts=$25||$3,038||$2,250|
|NY Mini Gold||YG||All 12||10 cent/fine troy oz||33.2 fine troy oz.||10 cent/fine troy oz||$338||$250|
|NY Mini Silver||YI||All 12||$.001/troy oz.||1,000 troy ounces.||$.001/troy oz.||$459||$340|
|100 oz Gold Futures||ZG||All 12||10 cent/fine troy oz||100 fine troy ounces||10 cent/fine troy oz||$1,822||$1,350|
|5,000 oz Silver||ZI||All 12||$.001 per troy ounce||5,000 fine troy ounces||$.001 per troy ounce||$1,822||$1,350|
I understand your hesitation. Although I think the dollar is becoming worthless, I quit buying my fund when gold was at $400. I am not yet ready to sell, but I am watching things closely. I can't eat gold, but in a sick world like this, I may need it to buy bread. My college professor told us to use gold as insurance. Buy enough of it to cover things if a German, Russian or Argentine style devaluation occurs. Hope that it doesn't happen and be happy if you take a loss because times were good.
An insurance bet against what?
I take such "advice" with an entire saltlick.
1971 is a convenient year. 1980 is an inconvenient year. Your 80 oz that are now worth approx $51K were worth approx $64K then. Run that comparison to inflation over the last 26 years...
Gold is insurance against a loss of faith in official authority and the money backed up by it...
OK. But let's assume that gold is riding a bubble that is about to burst like it has many, many times in the past. How does gold provide insurance against anythng if, as in 1981, for example, the price peaks at around $800 an oz. and then heads into a steep decline where it stays for the next 22 years or so?
"An insurance bet against what?"
Are there any shortfalls in potential disasters? The housing bubble, bird flu, Iran, the deficit, China not to mention 50% of the country that is clueless on basic economics and the other party, the one in power, clueless about spending restraint?
Lots of potential bad stuff out there. What if the tax and spend democrats take over. If you think the republicans in congress are out of control wild spenders, imagine democrats who both spend like holywood trophy wives and disarm us in the face of terror.
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