watch this video and then you tell me! [ame="http://www.youtube.com/watch?v=biSjLFdjG-Y"]Gerald Celente - Russia Today - 02 September 2011 - YouTube[/ame]
I can't see videos because my internet service is too slow. But the answer is yes, gold is a bubble just like domestic real estate was in the last decade and technology stocks were in the decade before. There is no doubt that the price of gold will one day decline. The question is how much and when? Nobody knows the answer to that.
Knows? No...nobody 'knows' anything about the future. But as investments go...it's a lock; until interest rates rise substantially, the gold/silver market will not collapse. Answer me this please...where is the best return on your investment over the past 10, 5, 2 and 1 years between gold/silver, bonds, cash equivalents, real estate and stock markets (in general)? Gold/silver by a MILE. Why? Because the huge personal/public debts, artificially low interest rates, huge money 'printing' and unprecedented corporate bailouts that generally started about 10 years ago, are slowly destroying the West's/Japan's economies. And the ONLY place that is relatively safe from these horrible government policies (apart from some 'normal' commodities) are precious metals. The government cannot really control their prices. They cannot devalue their value by making more of them as the supply is relatively finite. And if they started to buy them all up - that would just inflate the price even more. Other then revoking the legal ability of private citizens to own precious metals - something that may happen again one day - there is little they can do about them.
Well that is certainly a good explanation for how gold prices have gotten to where they are. But gold is cyclical and has had wide swings in value for as long as I can remember. I can also remember when the media was saying that the stock prices would go up forever in the 90's because we were in a "new economy" and intrinsic value and capital and PE ratios and profitability were unimportant. I think gold was the way to invest 10 years ago. Not now. But, as you say, nobody knows. It is a bubble. It hasn't burst yet but, when it does, it will collapse. All bubbles do.
BTW - imo - the real estate bubble was very different then the gold/silver 'boom'. Booms can only last as long as new money flows into them. Once the new money stops - the boom ends (and often collapses). There was only a very finite number of people that could buy houses in America. You just cannot start giving toddlers mortgages - though I imagine some bank, bean counters tried. Once that supply of new home buyers was exhausted - the housing boom was doomed. But almost anyone can buy gold or silver. And in just about any amount. Plus, the supply of houses is semi-infinite. As long as you have trees and a few other things, you can just keep building them and building them (the 'ghost' Chinese city of Chenggong for example). But the supply of precious metals is relatively finite - there is only so much of them in the ground and above it. And finally, the American housing boom was more-or-less created by the government. They created artificially low interest rates, openly encouraged sub-prime mortgages and looked the other way while banks lent to just about anyone. However, there is very little the government can directly do about the precious metal market - short of outlawing private precious metal ownership.
Two things: 1) Imo, NEVER listen to the mass media about economic advice. How many 'economists' predicted the dot.com crash or the housing bust? Very few. 2) IMO, gold/silver are not cyclical. They are going up for a very specific reason - inflation/monetary instability. Just look when the gold boom started, about 11 years ago. Just about when the U.S. Government/Fed started to fall in love with ultra-low interest rates, market manipulation and abandoned balanced budgets (and btw - the DOW has been basically flat since then). Gold has risen about 600% since then. And it will (IMO) continue to rise as long as the inflationary and monetary instability concerns continue. And since Bernanke recently promised to keep interest rates artificially low until at least 2013 - these concerns will almost certainly continue for some time.
Additionally...I agree that the gold/silver market will probably fall one day (assuming the gold standard does not come back). And I think the trigger will be significantly rising interest rates. BTW...I am NO EXPERT
... anyone doubt there's a gold bubble when it's backers are espousing mutally exclusive theories on why it's a good investment?
The two statements were about two TOTALLY different aspects of gold. You honestly cannot see that for yourself? The first one was that gold - unlike fiat currencies - cannot be produced by the government anytime it wishes and thus deflate the value. And second, gold - unlike real estate - can be purchased by almost anyone. Have a more understanding day.
even though gold fell this week I am still looking ahead, perhaps I may even buy some more if the price is right
Sounds just like the people who were talking about the "new economy" when Bush took office. The technology sector. particularly internet stocks, had produced a bubble. People were bidding up stocks to insane PE ratios because profitability and assets didn't matter in the "new economy." We had companies with no assets buying established companies with the proceeds from that bubble. We had a recession right then and then recovered just in time for the real estate bubble. We are still swooning from that one. And you think gold can climb forever because it can't be printed by the government? Real estate can't be printed by the government either. Neither can internet companies. Getting into gold now is the wrong concept. You want to buy low and sell high. Not the reverse.
Where exactly did anyone in this thread say that 'gold can climb forever'? I, personally, not only never typed it...I have never even thought it. Many of us who invest in gold believe that the fundamentals are there that gold should go to at least $2500/oz.. But let's say it only goes to $2000 and then tops out (probably because the Fed goes back on it's promise and starts to raise interest rates - though that seems doubtful).? Right now gold is at $1633/oz. If it goes to $2000 - that is what, a 20+% return on your investment? Now please tell me another area of investment where the fundamentals over the next year or so look good for a 20+% return? Stocks? Real estate? Bonds? You see the DOW or your local real estate market going up 20+% in the next year or so? Do you see ANY realistic chance of that happening? I don't. But the fundamentals of gold and silver are (imo) they go up when there is inflationary concerns and monetary instability. And the western world has that in spades right now. The US dollar index is all over the map and inflation has tripled in the U.S. in the last 12 months. http://www.bloomberg.com/apps/quote?ticker=DXY:IND http://www.usinflationcalculator.com/inflation/historical-inflation-rates/ And this has been going on for about 10 years now - ever since the Fed decided to lower interest rates to artificially low levels. And how long has gold been booming? Well, look for yourself. So please tell me where I should put my money then that has a strong chance at a better return over the next year or so - if not in gold/silver?
It's been booming about as long as internet stocks did in the 1990's. The problem isn't so much the upside as it is the downside. Gold has a history of crashing badly when it declines in value - moreso than most other investment vehicles. It's your money. Best of luck to you.
Sure, gold/silver will probably come down hard one day. But, imo, it will not be before the Fed and other central banks start to noticeably raise interest rates and stop their 'cheap' money policies. Because as long as 'cheap' money is being produced, inflation/monetary fears/uncertainty will continue. And as long as they do - gold/silver should do (overall) well. But thanks.
and what killed the tech bubble? High interest rates what killed the LBO market of the 80's ? High interest rates what killed the comodities boom of the 70's? High interest rates Even the great depression came after interest rose in 1929 And so.......do you see interest rates rising anytime soon? PS.....this is perhaps the 5th time I typed this and its getting tiresome....you guys really need to learn some basic economics!
I don't agree with your premise so I have no comment except that you should invest your money as you see fit. If gold doesn't crash, then you will do just fine.
Wow, what a wonderful gold bug revisionist history totally dissociated from realty. The whole boom/bust discourse is pretty useless as an economic theorem since it is accompanied with zero predictability. All we can say is that stocks, commodities and assets rise and fall due to some factors we understands, and many factors we don't understand or can't predict. That's life in a complex economy like ours.
you never answered my last post....name me one bubble that was ever formed during high interest rates?