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Are we in a Gold Bubble
19 April 2006 | Jim Verdolini

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.


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KEYWORDS: bahog; chatroom; gold; nolink
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To: Labyrinthos
I didn't say I subscribe. I only wanted to explain the basis behind the theory. I'm not saying there will be a monetary crisis similar to those nations. If there was bullets, beer and whiskey may be better to barter with for all I know.

For a better example of what happened here in the good ol USofA how much was gold when RMN pulled us off the gold standard in the early 70's. Gold price held up fairly well to the stagflation/inflation of 1975-81. I'm not pulling price comparisons out of myass for you. Look it up.
101 posted on 04/20/2006 8:10:07 AM PDT by zek157
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To: zek157

I believe you, I believe you.


102 posted on 04/20/2006 8:15:19 AM PDT by Labyrinthos
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To: Southack

Again, I'm not saying that will happen. Those were extreme examples, but it's the same principle with any level of inflation. Someone asked the question why and I over boiled the answer. Keynesian economics tends to devalue the $ over time and gold retains it's value in relation to the devaluation as does housing and real estate (usually).


103 posted on 04/20/2006 8:18:45 AM PDT by zek157
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To: Jim Verdolini

Why? And who has enough to sell to drive the price back down to $500?


104 posted on 04/21/2006 5:38:33 AM PDT by hubbubhubbub
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To: Labyrinthos

"What do you think will happen to the price of gold when there are more sellers trying to cash in than there are sellers willing to buy?"

Why do you think people will not buy? Have they ever not bought?


105 posted on 04/21/2006 8:51:12 AM PDT by Jim Verdolini (We had it all, but the RINOs stalked the land and everything they touched was as dung and ashes!)
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To: hubbubhubbub

"Why? And who has enough to sell to drive the price back down to $500?"

So I can afford to buy. At over $600 the actual amount of gold I can buy is less than at $500. It is simply wishful thinking.



106 posted on 04/21/2006 8:54:12 AM PDT by Jim Verdolini (We had it all, but the RINOs stalked the land and everything they touched was as dung and ashes!)
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To: Jim Verdolini

I was reading - that with all the gold ever mined *there is 2/3 oz per person. If everyone in the *united states wanted to own 1 oz, it would take almost 4 years of total world production to meet the demand. *More steel is poured in one hour that all the gold ever mined.


107 posted on 04/21/2006 9:13:27 AM PDT by bjs1779
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To: Jim Verdolini
Why do you think people will not buy? Have they ever not bought?

Because I was refering to the situation described by you and others when people buy gold today as an insurance policy against severe economic difficulties, if not economic chaos, such as the hyper-deflation that occurred in Germany during the early 1930's. If the people, like yourself, who have already brought gold as an insurance policy start cashing in their stash with dealers and jewelers, as you have described, then the price for the gold is going to nose dive unless there are sufficient buyers to boost the price or at least keep it stable. But what makes you think there will be enough people during times of severe economic crisis who will have spare cash on hand to buy gold? If there are lots of sellers cashing in on their "gold insurance policy," but very few buyers, then the price of gold will head south.

108 posted on 04/21/2006 10:26:33 AM PDT by Labyrinthos
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To: Labyrinthos

Because there are always the rich. No matter how bad things get someone always rises to the top and begins grabbing stuff. Even the commies had their elites and those elites had resources.

As far as I know there has never been an economic disaster in which gold and silver were not in high demand.


109 posted on 04/21/2006 1:07:35 PM PDT by Jim Verdolini (We had it all, but the RINOs stalked the land and everything they touched was as dung and ashes!)
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