Yeah, I’d say you’re dead on. I’ve been saying for a while that we’re looking at a potential gold bubble due the rampant speculation in the basic commodity and the several gold ETFs that have sprung up of late (7 at last count I think), and all the cheesy ads pumping gold as the next sure thing.
Retail investors are usually the last to get in on the bubble since they’re usually the least informed and fall for the worst ads possible, so I’d say using your friends as an observational metric is justifiable. For example, think back to all those Countrywide and DiTech ads for home equity loans and liar loans back in 2000 to 2006.
But what I find disturbing are the ads that pump gold just like they did real estate back in the mid 2000s. Phrases like “X can’t go down in value”, where they once said this for real estate because “we all know real estate never depreciates”. Yeah, right!
But I certainly won’t deny that gold proponents have a strong case. I still think the US Dollar has some problems and will continue to depreciate maybe a little faster than it has in the past, but I think gold may have ran too far to fast due to speculators and momentum investors.
So as a long term investor, and most gold investors like to think of themselves as buy & hold investors, I think the big question you have to ask yourself is do you really want to buy something that’s tripled in price over the last 5 years or buy something else that’s fallen 50% of more?
Also, I wrote a post a few months ago saying “10 reasons you shouldn’t invest in gold” and man, did I get slammed! The gold bugs teed off on me bigtime!
