How to tell when gold is in a bubble.

[Master Shake]

From Jesse (is he still a member?)

When the junior miners start showing these kinds of returns, you might be in a bubble.

We're nowhere near that point yet.



http://jessescrossroadscafe.blogspot.com/2009/11/how-can-you-tell-when-gold-is-in-bubble.html

[Jesse]

Re: How to tell when gold is in a bubble.

Always.

Just don't post much.

[Master Shake]

Re: How to tell when gold is in a bubble.

Always.

Just don't post much.

I visit your site a couple times a day. Congrats on making the Periodic Table of Econo-bloggers.

[jdv]

Re: How to tell when gold is in a bubble.

I go to Jesse's every day too. Smart guy.

[jtabeb]

Re: How to tell when gold is in a bubble.

From Jesse (is he still a member?)

When the junior miners start showing these kinds of returns, you might be in a bubble.

We're nowhere near that point yet.



http://jessescrossroadscafe.blogspot.com/2009/11/how-can-you-tell-when-gold-is-in-bubble.html

There is a FAR SIMPLER and MORE ACCURATE way.

When Suzie Orman says "Buy, Buy, Buy"! That's a top.

[FRED]

Re: How to tell when gold is in a bubble.

We'll let you know.

[audrey_girl]

Re: How to tell when gold is in a bubble.

interesting commentary on this by John Hathaway of TGLDX funds on kingworldnews.com last week about this.

Hathaway says this is the key question - when to get off this train?? (assuming you are on it now). He said to keep an eye on the dow:gold ratio...

[metalman]

Re: How to tell when gold is in a bubble.

interesting commentary on this by John Hathaway of TGLDX funds on kingworldnews.com last week about this.

Hathaway says this is the key question - when to get off this train?? (assuming you are on it now). He said to keep an eye on the dow:gold ratio...

first dow/gold chart i ever saw was posted here in 2001...



last update?



2015 sell?

[ThePythonicCow]

Re: How to tell when gold is in a bubble.

A less fuzzy version of this "200 Years - Dow/Gold Ratio" graph:

[metalman]

Re: How to tell when gold is in a bubble.

A less fuzzy version of this "200 Years - Dow/Gold Ratio" graph:

what's the mumbo jumbo on the readings above & below the 'channel'?

[jk]

Re: How to tell when gold is in a bubble.

A less fuzzy version of this "200 Years - Dow/Gold Ratio" graph:

not quite up to date. the ratio is roughly 10 right now.

[ThePythonicCow]

Re: How to tell when gold is in a bubble.

first dow/gold chart i ever saw was posted here in 2001...

Ok ... the graph for the last 200 years seems to have the Dow/Gold ratio trending upward, whereas for the last 100 years, this ratio seems to be peak sporadically from a flat baseline of perhaps 2:1.

Past performance is no guarantee of future results.

Given the following possible means to determine when I should reduce my gold holdings:

1. Follow the upward Dow/Gold trend of the last 200 years and presume that ratio continues to mean revert to its upward trend.
2. Follow the baseline Dow/Gold ratio of the last 100 years and presume that ratio returns once again to that baseline (perhaps 2:1).
3. Wait for the call from EJ.
4. Wait for some personally determined decision based on various experts including EJ, and on my own reading of the situation.

I will choose the last one (EJ, et al). Many here will choose the third one (EJ). The future will inform us of the future, when it becomes the past, but even then only if we are sufficiently perceptive.

[metalman]

Re: How to tell when gold is in a bubble.

Wait for some personally determined decision based on various experts including EJ, and on my own reading of the situation.

that's the one i'll choose too.

among 'various experts' i exclude anyone who got into gold after 2001 or took a position then traded in and out of it since 2001.

no conviction = no credibility.

[ASH]

Re: How to tell when gold is in a bubble.

Ok ... the graph for the last 200 years seems to have the Dow/Gold ratio trending upward, whereas for the last 100 years, this ratio seems to be peak sporadically from a flat baseline of perhaps 2:1.

Past performance is no guarantee of future results.

Given the following possible means to determine when I should reduce my gold holdings:

1. Follow the upward Dow/Gold trend of the last 200 years and presume that ratio continues to mean revert to its upward trend.
2. Follow the baseline Dow/Gold ratio of the last 100 years and presume that ratio returns once again to that baseline (perhaps 2:1).
3. Wait for the call from EJ.
4. Wait for some personally determined decision based on various experts including EJ, and on my own reading of the situation.

I will choose the last one (EJ, et al). Many here will choose the third one (EJ). The future will inform us of the future, when it becomes the past, but even then only if we are sufficiently perceptive.

In my opinion, there can be no quantitative significance to a particular value of the Dow:Gold ratio... especially any comparisons that span different historical periods of gold's exchangability to currency. I do think the basic pattern of such a chart has good qualitative significance, but any reference to the actual numerical value of the ratio for purposes of timing are an exercise in numerology. We should remember WHY paper assets rise and fall relative to gold -- all the causal relationships that EJ has highlighted -- and time our trading into and out of gold based on that. Are we managing our paper currency and public finances responsibly? If the public finances and outlook for the dollar are getting worse, then the fundamental case for gold (to an American, at least) are getting better. Add to that various behavioral observations to fine-tune the market call, and that should be that. I guess this mostly boils down to "wait for iTulip to tell us", but the point is that trends in the Dow:Gold ratio reflect trends in the underlying economics -- they don't dictate those trends.

[audrey_girl]

Re: How to tell when gold is in a bubble.

what's the mumbo jumbo on the readings above & below the 'channel'?

pulled it from here on seeking alpha

http://seekingalpha.com/article/1418...dow-gold-ratio