Wikinvest Wire

That's one long gold bubble...

Friday, December 18, 2009

Every time an article like this one at Forbes or this one by Nouriel Roubini crosses my computer screen on the subject of the current "gold bubble", it gives me quite a chuckle because we've become so used to calling things bubbles that, understandably, anything that looks like it's going up too fast gets that label these days.

The funny thing is, according to this data at Google news, the media has been calling gold a bubble for, not only years now, but decades.
IMAGE I could be wrong here, but, my understanding of how bubbles work is that they materialize rather quickly, fueled by media coverage toward the end and then they burst spectacularly - like the stock market bubble, the housing bubble, and the credit bubble.

The news coverage that you see above for the "gold bubble" looks nothing like the other three, rising gradually since 1970, the early-1980s gold price peak almost imperceptible in the graphic. The more you think about it, the more clear it becomes that, William Buiter's recent commentary may be on the mark - gold may be in a six thousand year bubble and may have another six thousand years to go before it bursts.

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4 comments:

Adam said...

Gold is a psychological like housing and stocks.

Except you can't live in gold or be a shareholder of a company.

Anonymous said...

Those goofy economists just want to scare people away from gold, and into paper currency. That way they can steal their savings via inflation to bail out the banks.

If people could get their pay/pensions in gold, the central bank would have nothing to steal. The banks would be forced to adopt a sensible business model.

Anonymous said...

The real question should be is gold going up or are other currencies going down. After all gold and silver are the world's oldest currencies

Anonymous said...

Adam... what?

We should read what you have to say b/c of which credential or intelligent thought in your head?

Yes, you can live in gold if you want (not sure if that's what you're getting at). An ounce of gold (around a thousand bucks, give or take a couple hundred) can be pounded out to gold foil the size of a football field. You can wrap that around your house like Tyvek if you felt so motivated. It's a great conductor and never tarnishes!

Gold is always liquid, so you can ALWAYS trade it for tangibles.... like a whole house, roofing shingles, a new water heater, etc.; or intangibles, like stocks or bonds... which are not liquid.

Smart (or you may say lucky) folks have been riding this bull since 2002. I only got in in 2003, shucks. Good luck to you!

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