See the divergence circa February ’09? That’s where smart money started exiting the market and gold entered the conscience of common folk. You might remember the Cash4Gold.com Super Bowl commercial. It should come as no surprise to you that it aired on February 1st, 2009.
Another notable factor, if you look around in the internet, the possibility that gold prices could go down does not even enter the public consciousness. You’ll find serious analysts forecasting gold to go to 1100, 1200, some forecast 2000, some forecast 5000 … it’s hard to find a dissenter who dares to forecast a decline. Just like Krugman was almost alone warning people about the upcoming housing bubble bust in 2005-2006.
Yet there are signs indicating that you should be worried, for example:
“… Gold jewelry market “close to dead” compared to a year earlier, and there is no real physical buying outside of investment demand… Jewelry buying typically accounts for around 60 percent of global gold demand.” (Reuters, September 18)
Unfortunate parallels between people buying gold now and subprime suckers buying houses in 2006 come to mind.
