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 ...
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.
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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.
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.
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
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, it’s 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....
Yeah, so?
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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