Gold seems to have all the characteristics of accelerating asset appreciation, or a bubble.
Suggest you read Rich’s investment articles on the subject of gold. Rich is a very sharp guy about financial investing. I don’t have a link for you, but I believe Rich has written about the question is there a bubble in gold.
Other experts, economists, financial analysts have also written on the topic of is gold in a bubble and arrived a similar opinion as Rich’s. Brilliant people looking separately at the same data arrived a similar conclusions.
My concerns about gold are more along these lines:
1) The (relatively) recent arrival of the GoldTracks ETF “GLD” has apparently increased the volatility in gold spot prices. That ETF is now said to have more than 600 tonnes of gold, more gold than is found in all but a few countries gold reserves (separately, not combined). Case in point: the recent quick fall from about $1,000/ounce down to $750/ounce.
2) Many have written on the claim there is a secret consortium of countries whose foreign reserve officers act in concert (massive selling or buying) to keep the price of gold within a trading range they prefer. You can search on the net and read about it. However, one could argue that if such a secret consortium does exist, it sure didn’t do a great job of preventing the recent price run-up to $1,000/ounce, did it?
3) I think the US stock markets hit a short-term bottom today (mid-day) and will now have a fool’s rally that will pull money out of gold, so gold could fall in the short term.
Having said all that, I’ll finish by sharing the simple fact that I made twenty-five grand on gold in the last 48 hours. So, at least this week, you’re going to have a hard time convincing me to hate gold!
