Let’s 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. That’s 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 haven’t 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 hasn’t yet made gold-related TV shows, movies, etc.
bubble elements in play
greed, fear, fraud, tv, regulatory, inflow, wall street product, consumer sentiment, irrational behavior, this time is different.
I have a list 30 long, to measure bubbles. The bear market bubble in stocks has a check mark on all 30. Like the nasdaq bubble burst, it is an unusual regulatory element that is going to kill it. Namely uptick and m2m.
Just my thoughts.
Who invented that rule?
I've got a few tulip bulbs I'd like to sell you cheap. They're not in a bubble, really.
I won't charge you anything crazy like $43m/bulb. Just $5m/bulb. What do you say?
I agree. Your Time Magazine cover imagery is apt!
Maybe when shoe-shine boys and beauticians are chatting about whether its better to buy Krugerrands or Maple Leafs, we’ll be some where near a bubble (or not, if there is a reason for gold to keep climbing).
Gold crossing 2000 may be big news, and with inflation, it may just always go up (in inflated dollar amounts, of course, but not in real value, since an ounce is an ounce.)
The “bubble” in gold will be a panic driven one, as the attractiveness goes beyond it’s value in inflating dollars, and instead based on its perceived value as a future inflation hedge.