Is GOLD (/silver/etc) a bubble?

[sumfuka]

Quote from Misthos:

You're comparing the world's oldest form of currency and store of value to beanie babies? How many beanie babies do central banks keep as reserves?

1, That baby is called chairman, he'll be counting beanie all day;everyday.

 

[zdreg]

Quote from makloda:

So what do you do if the market suddenly doesn't agree with what your "4 factor" model is saying? What if it drops 30, 40%, 50% even though all signals scream buy? Buy more? Sell all? Wait and see? Panic?

I assume most "level headed gold investors" look to add on weakness (buy low hoping to sell high, motivated by greed) rather than sell on weakness (protecting capital). That's exactly why we get distributions with fat tails in time series of returns in financial markets. Gold isn't any different.

above are words to the wise expressed in practical terms not in philosophical terms. they will be unfortunately ignored by most traders and investors.

 

[rcaldwell]

Quote from zdreg:

above are words to the wise expressed in practical terms not in philosophical terms. they will be unfortunately ignored by most traders and investors.

Not if you are following your charts. This metal has been making higher lows over the past few years. Nothing broken yet. We'll see.

 

[PaulRon]

Was NASDAQ in a bubble leading up to 2000? Bubbles can last for years and yield great returns in the process. Gold bull markets have historically lasted at least 15 years which says we have at least 5-6 years left in this bull.

 

[Debaser82]

The biggest problem for gold holders won't be the damage that could occur from a 50% drop but the selling of it at 5K before it rockets up to 10K.

 

[Father Branigan]

Gold has been a currency for almost the entire history of man and it is indeed a reserve currency held by governments in very large quantities.

The growth in the middle-class in China and India is skyrocketing right now. Those citizens can buy gold for personal use or investment, or for business use or investment. In addition, their governments will continue to hoard gold as much as they possibly can (and we're talking about big players here).

Gold is also incorporated directly into the artwork and tableware in China and India (statues, murals, sculptures, pottery, tableware).

Limited supply. The supply of gold will rise slowly.

More people bringing more demand. The demand for gold will rise sharply.

Result is that the price of gold will rise gradually at times and sharply at times, with some small downward corrections along the way.


Now, to test the hypothesis, we sit back and wait 10 years.

 

[tmarket]

The future is uncertain, but there is whiff of deflation in the air

Last Friday, the U.S. Labor Department reported that the consumer price index (CPI) rose 0.2% in January and climbed by 2.6% over the past 12 months. But after stripping out volatile food and energy prices, prices actually fell by 0.1% in January, marking the first time since 1982 that "core CPI" has declined. While the absence of any signs that runaway inflation is materializing initially soothed markets, the report also signaled that another potentially tricky economic drag, deflation, is a very real concern.

Together with the Dow:Gold ratio picture, they suggest gold prices may not go anywhere fast as it did in the 1930s. Then again, if the inflation picture changes, it could go for a wild ride, as it did in the 1970s.

 

[scriabinop23]

Every anemic jobs report we see is supportive of continued low interest rates, increased central bank accomodation - supportive of gold prices. Most of the gold miners out there are in between a 10-15 PE, hardly what i'd call overvalued, and represent a great value, especially amid still cratering energy demand fundamentals (cost side).

 

[makloda]

Quote from Father Branigan:

Result is that the price of gold will rise gradually at times and sharply at times, with some small downward corrections along the way.

That's amazing. Sounds like one of those "too good to be true" risk/reward scenarios. Unlimited upside with limited downside. COUNT ME IN!!!!!

 

[Debaser82]

Quote from makloda:

That's amazing. Sounds like one of those "too good to be true" risk/reward scenarios. Unlimited upside with limited downside. COUNT ME IN!!!!!

Why try to be smarter than George Soros?