Fortune calling gold a bubble
DrBuster
Posts: 5,378 ✭✭✭✭✭
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Linkadoodle
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Usually this is an indication that the bubble is about to burst, but the sovereign debt crisis in Europe is far from over, so I don't think were near the end.
"Gold has already started slipping. It declined 6% in July to a recent $1,160 an ounce."
Yes it did, and it has been recovering ever since.
I agree the price is inflated due to insecurity in currency and financial markets, but it's not like housing bubble (i.e. there's nothing artificial driving it).
While some economists deny that bubbles occur, the cause of bubbles remains a challenge to those who are convinced that asset prices often deviate strongly from intrinsic values.
Perhaps some feel that we are in a "speculative bubble", and that gold is not priced what it is really worth. The contrarians would indicate that the gold asset class is only reflective of the weak global currencies. We'll see who is right in the end.
<< <i>And let me guess, they're not calling bonds a bubble
gold, cotton, shale stocks, bonds, China
No to all.
I don't know anyone who invests in gold. Even my wife though I was a quack (until paid for the kitchen remodel with cash after selling a few coins). Gold is so under owned, its scary.
When your neighbor starts asking what gold stocks to buy, then its a bubble. Forbes makes its money by selling stock recommendations, not by endorsing gold.
This article assumes gold is strongly linked to inflation. It's not. If one surveys gold's price vs. inflation over the past 30 yrs one will find almost no correlation - you just as well should flip a coin. But what you will find is that gold has been well correlated to the dollar and real interest rates. The author doesn't understand that gold is a competitor to weakening currencies/lack of confidence in govt. and therefore inflation is not needed to see its price rise. The author doesn't also appear to understand how much the CPI formula has changed since 1980. The CPI is far more resistant to inflation today than it was 30 yrs ago....and that's by design. What govt wants to have a CPI that accurately plots price inflation? That would cost them a lot of money in benefits and cola's. The govt's own misguided CPI numbers show that average prices have increased 2.65X since 1980. So why is it a bubble if gold's peak price to date is 1.45X higher than in 1980?
roadrunner
https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163
That article should make gold bugs smile. MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
The key question is, are we at the *top* of a bubble?
I don't think so.
Knowledge is the enemy of fear
the small investors storming in are like a dust devil
PMs are the one part of my holdings that have made money this year (interest on CD's hardly counts).
I'll just keep adding Au and Ag as cash flow will allow.
https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163
I knew it would happen.
Currently there are about 62+ million housing units in China that have not had electrical service for at least 6 months...AKA -vacant
There are also about 50+ million housing units coming on line via developers. Possibly more vacancies.
The housing bubble in China may be coming soon.
How will that affect the world commodity demand?
Currently there are about 62+ million housing units in China that have not had electrical service for at least 6 months...AKA -vacant
There are also about 50+ million housing units coming on line via developers. Possibly more vacancies.
The housing bubble in China may be coming soon.
How will that affect the world commodity demand?
High commodity prices are linked to inflated fiat currencies. So if the commodity prices scare you, so should the associated fiat depreciation that caused it. In fact the "real" commodity prices didn't change, only their value in relation to fiat did. Compare their prices to gold over the past 10 yrs to see how their "real" price changed.
China may be in a housing bubble but I don't think they got there with liar loans and other gimmicks. They also are required to put significant skin into their housing. They shouldn't get whalloped to the same degree the US did. Plus they are in their infancy in building infrastructure for a rural population that wants to become middle class. They may have a housing bubble similar to what the US went through 20 yrs ago...and then recovered from. But it would be best if they didn't recover from their coming housing slump using the gimmicks we did in the 2003-2007 period.
roadrunner
<< <i>China also has about 900 Million people who literally poop in a hole in the ground. I'm betting that's a whole lot of copper needed for indoor plumbing. >>
Ok, that was funny and there are germs of truth in that statement.
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
China's real estate bubble is swelling beyond belief. I will be curious to see how they deal with it.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
It wouldn't surprise me if the Chinese hide their gold in the same hole that I referenced a few posts back. Good luck confiscating that.
<< <i>I would not be surprised to see China eventually "confiscate" all of this privately held gold. It's their way of "buying" on the open market.
It wouldn't surprise me if the Chinese hide their gold in the same hole that I referenced a few posts back. Good luck confiscating that. >>
Don't forget that the chicoms make liberal use of the death penalty, especially economic crimes against the state.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i>
Don't forget that the chicoms make liberal use of the death penalty, especially economic crimes against the state. >>
They don't kill the whole person. They just cut him up for parts.
<< <i>
<< <i>
Don't forget that the chicoms make liberal use of the death penalty, especially economic crimes against the state. >>
They don't kill the whole person. They just cut him up for parts. >>
......which they actually sell to the wealthy who are in desperate need of a transplant.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i>Anyone actually know anyone who invests in gold? Got any neighbors giving you gold stock tips? People at the supermarket talking about gold? >>
Love him or hate him, Glenn Beck pimps Goldline daily. And love them or hate them, they have sold a bunch of coin (rumored at very inflated prices) to a bunch of folks who hear every day about how the only safe place to have money is in gold.
So I think plenty of average folks in this country are "investing" in gold.
-Fred
Successful BST (me as buyer) with: Collectorcoins, PipestonePete, JasonRiffeRareCoins
<< <i>
<< <i>
<< <i>
Don't forget that the chicoms make liberal use of the death penalty, especially economic crimes against the state. >>
They don't kill the whole person. They just cut him up for parts. >>
......which they actually sell to the wealthy who are in desperate need of a transplant. >>
Which works out well for the old dudes since it gets rid of some
of the competition for the young women and gives them more
time to do it.
It's win, win, win, for every'body" and returns much needed foreign
currency for the country. Well... ...at least... ...no one is complaining.