So gold's a bubble Hmm?

[jtabeb]

I think if you read this commentary by Jesse and put your thinking cap on, you'll come to the correct conclusion.


http://jessescrossroadscafe.blogspot...-holdings.html


Is gold a bubble? As someone who has been a close observer of bubbles for the past ten years the data does not recommend that conclusion. And what makes me even more curious about this point of view is that the very people who for the most part denied the existence of the obvious bubbles in tech, housing, risk, banking and credit, even to the point of absurdity, who could not or would not see a bubble if it perched on the end of their nose, who are card carrying members of the international monied fraternity, are the most vocal in calling gold a bubble with emotional arguments lacking any fundamental data. What's up with that?


What UP, Indeed.

[jpatter666]

Re: So gold's a bubble Hmm?

Definitely was a great article and worth reading.

[audrey_girl]

Re: So gold's a bubble Hmm?

I think if you read this commentary by Jesse and put your thinking cap on, you'll come to the correct conclusion.


http://jessescrossroadscafe.blogspot...-holdings.html


Is gold a bubble? As someone who has been a close observer of bubbles for the past ten years the data does not recommend that conclusion. And what makes me even more curious about this point of view is that the very people who for the most part denied the existence of the obvious bubbles in tech, housing, risk, banking and credit, even to the point of absurdity, who could not or would not see a bubble if it perched on the end of their nose, who are card carrying members of the international monied fraternity, are the most vocal in calling gold a bubble with emotional arguments lacking any fundamental data. What's up with that?


What UP, Indeed.

thanks for the post...

would like to add link from Mr. Fitzsimmons - he comes from this at a slightly different (energy) angle - but has a very nice table that sums things up in his seekingalpha post

http://seekingalpha.com/article/1826...vious-problems


regards

ag

[due_indigence]

Re: So gold's a bubble Hmm?

I challenge the efficacy of the bubble metaphor when describing gold. Gold is a constant or bellwether against which all other things rise or fall. To the extent gold appears bubble-like only means that other things are collapsing. I don't think that's a trivial distinction either. Gold is the independent variable.

[jtabeb]

Re: So gold's a bubble Hmm?

Gold is the independent variable.

Naw, It's a CONSTANT!;)

[thisandthat.nowandth]

Re: So gold's a bubble Hmm?

A week or so before Soros waved gold down with one hand [while undoubtedly buying with the other] John Embry addressed the "bubble" myth in Vancouver.

Snip:

John Embry: Why gold will keep going up for years

Submitted by cpowell on Fri, 2010-01-29 20:46

Remarks by John Embry
Chief Investment Strategist
Sprott Asset Management, Toronto
Vancouver Resource Investment Conference
Hyatt Regency Hotel
Vancouver, British Columbia, Canada
Monday, January 18, 2010

In view of the foregoing powerful positive fundamentals for the gold price, I find it almost nauseating that various pundits are referring to gold as overpriced and in a bubble phase. Nothing could be further from the truth, and, in reality, gold continues in its stealth bull market, which has now seen nine consecutive higher year-end closes. Despite this, as I mentioned earlier, it has attracted very little attention from the investing public in general.

The dedicated goldphile has participated throughout, and a number of sophisticated financial players have come on board recently, the latest being the legendary trader Paul Tudor Jones. But the average investor remains uninterested. It is instructive to remember that at the end of the last bull market in 1980, people were lined up around the block outside the Bank of Nova Scotia in downtown Toronto to purchase physical gold. Today the only lines that have formed are outside emporiums set up so the unsuspecting public can unload their gold jewelry for cash. To have a bubble of any significance, there has to be wide public belief, and it certainly isn't on display in the gold market.

More importantly, if gold were overpriced, the gold producers would be experiencing an earnings bonanza. A close examination of the recent earnings statements of most major gold companies reveals that they are earning very little and are certainly not achieving the return on capital necessary to justify their involvement in a very risky and difficult business.
I find sentiment in the sector to be remarkably subdued in the face of compelling fundamentals. Many attractive junior gold stocks are not even keeping up with the rise in the gold price. If history were any guide, these stocks would be rising at three to four times the rate of the gain in the gold price, but investor skepticism is holding them back.

From a media perspective, if we were approaching the end of a bull market, the newspaper articles and television clips would be universally bullish touting the obvious merits of the yellow metal. There is indeed more coverage recently because of the relentless price rise, but it tends to be skeptical with the bearish commentators continuing to get the most exposure despite having been continuously wrong.

There is no better example of this than an individual who my compliance department would prefer that I not identify. However, I’ll give you a broad hint -- he writes virtually daily for a noted Canadian gold Internet site. Dubbed the Tokyo Rose of gold commentators, he is always quoted in articles with a negative slant despite having been consistently wrong since the inception of gold's bull market. In my opinion, as long as he gets any press at all, we are a long way from the end of this bull market in gold.
Finally, it is widely acknowledged that if the peak gold price in the last great bull market ($850 in January 1980) were to be adjusted to reflect the U.S. inflation rate in the intervening period, it would be equivalent to $2,300 today. That the current gold price is approximately half of that should put to rest any suggestion that this is a bubble.

That's not to say there aren't several bubbles forming in other financial markets (most notably in government debt instruments) as a result of a new bout of central bank madness, but gold is not on the list. In fact, I believe that we are many years and several thousands of dollars in price away from the end of this powerful bull market.

Full Text

[strittmatter]

Re: So gold's a bubble Hmm?

A week or so before Soros waved gold down with one hand [while undoubtedly buying with the other] John Embry addressed the "bubble" myth in Vancouver.

Snip:

Soros is still Soros, a master of the game.

JMO - either way, (short or long) I say he's talking his book. Again.


Seekingalpha-Why-Soros-is-probably-buying-gold-now

[MulaMan]

Re: So gold's a bubble Hmm?

There is no bubble because there a few buyers. Go to the shopping mall, ask your friends, how many of them have been buying gold?

There is no credit to feed the bubble.

There are no savings in America to feed the bubble.

Rather than a bubble the markets are hanging off the edge of cliff, being held up by central banks and there is nothing but a huge empty pit below so once it goes we are talking 80% depression level crash.

[thisandthat.nowandth]

Re: So gold's a bubble Hmm?

Soros is still Soros, a master of the game.

Thanks for the link strittmatter.

Best performing asset across the past decade and he's a non-participant ? Look , if George Soros doesn't know what a real bubble looks like , I have a beachfront condo in Haiti I'd like to sell him.

-Joaquin-

[flintlock]

Re: So gold's a bubble Hmm?

Gold as a bubble? Perhaps. But how large? Banks worldwide have recently lost more value than all the Gold ever mined. Anyone know the total value of all tech firms in the world at the time of the tech collapse?

I read somewhere Gold had a total value of something like $5 or 6 trillion. It's just nice to see things in perspective.

[Boerg]

Re: So gold's a bubble Hmm?

I challenge the efficacy of the bubble metaphor when describing gold. Gold is a constant or bellwether against which all other things rise or fall. To the extent gold appears bubble-like only means that other things are collapsing. I don't think that's a trivial distinction either. Gold is the independent variable.

I challenge your assertion that gold is a bellwether against which all other things rise and fall. I do agree that most of the time that is the case, but I'm not sure it isn't bubble proof.

During the tech stock bubble, people were buying tech stocks for the simple reason that the price was rising, and in my mind that is a bubble. Would it be possible for this to happen with gold? Could a run-up in gold prices start from currency risk but elevate itself to a bubble, bucking out most rational buyers? Or would a stratospheric gold price always indicate an underlying sentiment of currency risk?

I tend to think insanity can take over in any market, including gold. If most of the buyers are irrational, I don't think it can be considered a bellwether.

[Jay]

Re: So gold's a bubble Hmm?

Gold is not tax advantaged. It rises against the stream. Bubbles are blown up; this rise has been blown back at every turn. Yet it continues. Are you more confident of government today than yesterday? If yes, sell. If no, buy.

[grapejelly]

Re: So gold's a bubble Hmm?

the hedge funds are all buying gold

people everywhere -- all they talk about at parties is gold gold gold

they are BUYING gold at parties

Time, Fortune, Forbes...all have cover stories on GOLD

Lines form to buy gold at the local coin store and pawn shop

...oh wait...sorry...I am a few years early on this...apologies

[jtabeb]

Re: So gold's a bubble Hmm?

the hedge funds are all buying gold

people everywhere -- all they talk about at parties is gold gold gold

they are BUYING gold at parties

Time, Fortune, Forbes...all have cover stories on GOLD

Lines form to buy gold at the local coin store and pawn shop

...oh wait...sorry...I am a few years early on this...apologies

Man, you had me worried for a sec. Phew!:eek:;)

[big67]

Re: So gold's a bubble Hmm?

The dog that did not bark is Gold that did not fall off a peak? +5.7% annualized USA GDP growth and gold standing still... it tried to break $1080 for some time now but no way, every time it bounces back. :cool: