| Author |
 Replies: 22 / Views: 3,066 |
|
New Member
United States
9 Posts |
With today's trend in the gold market, is gold already on the verge of moving into the bubble phase?
|
|
|
|
Rest in Peace
United States
9104 Posts |
 , Guillano! Choose an expert opinion. There's a 50/50 chance of being right. |
|
Pillar of the Community
United States
667 Posts |
Edited by mkfarm
12/26/2011 5:21 pm
|
|
Valued Member
United States
302 Posts |
Gold has been on a relatively steady uptrend for years. One typical characteristic of bubbles is that their uptrend is an accelerating uptrend which we have not seen in gold yet. When the curve gets steeper and steeper, then you will know for sure we have a bubble that will sooner or later pop.
|
|
Pillar of the Community
United States
5854 Posts |
I have looked at several charts of a couple bubbles like 1929, Japan in 1990, coins in 1989, dot.com in 2000, housing in 2006, and oil in 2008. They seem to start out as a multi-year uptrend often with a greater than average rate of return. Then they all end with a burst of frenzied buying sometimes resulting in the asset doubling or tripling or more in a very short period of time. The one bubble that I can think of that does not quite fit this picture is the Shanghai composite in 2007. That bubble began in a downtrend but still resulted in a almost 6 fold increase in a period of about 2 years. Gold has been in an uptrend for over 10 years with a high rate of return. So that seems to fit the pattern other bubbles in the past. Now, is gold in a bubble phase, I don't know.
|
|
Pillar of the Community
United States
3670 Posts |
Gold is worth a couple hundred bucks more this year, then it was this time last year. After a steady 12 year climb and no clear evidence yet of that strait up line that Mmerlinn mentioned which will point towards a possible bubble phase, makes me think gold might be immune to the bubble laws....
The one thing you all are missing with all those other bubble pops, THEY WERE NOT GOLD. Or the most trusted way of protecticing one's assets in these most uncertain economic times. And not my country's numbers don't just support this fact, but the entire WORLD STATS support my claim....
My point, gold is in a different ball park then all other commodities and is not subject to the same types of bubbles IMO. Trends created the other bubbles, and trends die. Gold has been going strong for literally thousands of years and will continue to be sought after for the rest of time, by us or other wise explorers from other planets perhaps. And it certainly is not a TRENDY thing to invest in just now, as it always has been and always will be....
Edited by Silverhawk74
12/26/2011 3:22 pm
|
|
Pillar of the Community
United States
5854 Posts |
How can I forget, gold and silver back in 1980. Similar pattern to some of the other bubbles that I mentioned. I think bubbles can happen with almost anything as long as people begin to think that it is a sure way to make money. Just go back to tulip mania in the 1637.
|
|
Pillar of the Community
United States
4008 Posts |
Quote:
With today's trend in the gold market, is gold already on the verge of moving into the bubble phase? My opinion is that gold is not in a bubble. For a true bubble to form, there must be widespread ownership of the item in question. Gold is narrowly owned, in the US anyway. Also, if gold were in a bubble, we would be seeing gains in the shares of the mining companies that was at least as great as that of gold over the past several years and we have not. Yes, a very miners have had some great gains but this seems more company specific than it is a market generality. If we want to talk bubbles, we need look no further than US and European government spending. Now THAT is a bubble! And it IS going to go POP! with quite a bang. The US dollar and US debt instruments have shown some strength lately due to European investors shifting money from Europe to the US. This looks a lot like a classic "out of the frying pan and into the fire" move to me. The debt problems of the US are larger than those of Europe and the inability of the US congress to even address them in any meaningful way is at least as bad as in Europe and probably worse. Once it finally becomes clear that there is no safety in US debt or the dollar we will see a mass exodus from both of those and into PMs and other commodities. When that happens, there will be a HUGE run-up in commodity prices. Will that become a bubble at some point? I don't know... maybe. |
|
Pillar of the Community
United States
3670 Posts |
"Once it finally becomes clear that there is no safety in US debt or the dollar we will see a mass exodus from both of those and into PMs and other commodities. When that happens, there will be a HUGE run-up in commodity prices. Will that become a bubble at some point?"
That theory makes much sense and most likely should indeed come to pass....
|
|
Pillar of the Community
Canada
1502 Posts |
movements in price of gold may be similar to 1980s or the tulip crash, but fundamentals are entirely different in all the areas that Ed pointed out. I see the recent dip as caused by the propping up of the failing US dollar by the fall of the failing Euro.
|
|
Rest in Peace
United States
9104 Posts |
I think the biggest difference between US and Yurrupean financial problems is that Yurrup is still a bunch of sovereign nations, despite a common currency. When decisions affecting the dollar are made, the entire country sinks or swims on them.
|
|
Valued Member
United States
264 Posts |
Breaking News: China Clamps Down On Gold Trading. http://www.cnbc.com/id/45794782With the Asian Gold/Silver buying season over and news that China is going to stop all Gold Exchanges in their country, January 2012 will be a good test for the strength of precious metal markets. How strong is the bubble now? |
|
Rest in Peace
United States
9104 Posts |
, rgathright, and Thanks for the heads-up. |
|
Rest in Peace
United States
9104 Posts |
Ignore the first link and use the second.
|
|
Valued Member
United States
320 Posts |
The question needs to be more defined.
Are we talking physical gold? No probably not a bubble at this point. But paper gold? I'd say that's a bubble.
The "price of gold" currently tracks both, being that they are supposedly interchangeable. But they're not, when you consider that there's more paper than there is the gold it represents.
I believe the paper bubble will pop and the physical will not. Perhaps it may deflate a little but not pop.
|
|
Pillar of the Community
United States
4008 Posts |
Yes, it is interesting to watch for divergence between the bullion and paper prices. One sign of this is when the physical metal price drops to a level that makes a lot of us want to buy all we can but there is very little out there to be bought. Either the dealers have sold out of it or they still have some and are holding it until a higher price returns.
There is a lot of comment on the net these days about large physical gold buyers by-passing the CME and going straight to the producers for their purchases. They can do this because they buy in multi-ton quantities. This is a pretty big deal as far as the trading markets go. It looks as if at least some of the big boys who want physical metal are not very happy with the CME right now and for good reasons... many of which are tied to the MF Global scandal.
|
| |
Replies: 22 / Views: 3,066 |
Posted 12/26/2011 10:51 am
