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A Golden Bubble? [debate]

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November 25, 2009 – Comments (11) | RELATED TICKERS: GLD

A question I have been having for a couple weeks now is in gold in a bubble? quite frankly I don't have a good answer. Im hoping you do. What is your opinion?

 

Keep in mind:

 

 

However gold in M3 (sorry, I couldn't find a recent chart)

it is currently around 0.09 

 

So do you guys think it is high, perhaps a nice shiny bubble, undervalued, or fair valued?

11 Comments – Post Your Own

#1) On November 25, 2009 at 9:56 PM, ChrisGraley (30.21) wrote:

Gold can't possibly be in a bubble. it's a measuring stick that has been manipulated by governments for decades. The rise in price that you are seeing is the market recognising the flaw in the system. I don't think that gold will drop below $1000 again. Ever!

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#2) On November 25, 2009 at 10:20 PM, starbucks4ever (98.94) wrote:

Chinese/Indian lemmings running to their destruction. When they collapse under the weight of their junk investments, including investments in gold, their central banks will be selling this gold for $50 an ounce, but there will be very few buyers.

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#3) On November 25, 2009 at 10:32 PM, TDUBFISH313 (40.19) wrote:

Watch the dollar bubble video on one of the other blogs and you'll have an understanding of the price of gold. It is quite interesting.

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#4) On November 25, 2009 at 11:16 PM, HarryCarysGhost (99.76) wrote:

Imo Gold is only good as a hedge on inflation. If you think inflation is on the horizon, then gold is definetely not a bubble.

Besides for that I much prefer Silver since it has Manufacturing uses and is cheaper to buy.

 

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#5) On November 25, 2009 at 11:46 PM, AvianFlu (34.80) wrote:

I vote for comment number 4.

Gold is not going up much. It is just taking a lot more green pieces of paper to buy the same amount.

By the way, I bought a 50 trillion dollar Zimbabwe federal reserve note the other day for $7.50. I probably paid too much, but it is a conversation piece.

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#6) On November 25, 2009 at 11:48 PM, rofgile (99.33) wrote:

zloj rocks!

Its a bubble - out of control sentiment everywhere.  I traded all my dollars in for hamsters today.

 -rof 

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#7) On November 26, 2009 at 12:12 AM, HarryCarysGhost (99.76) wrote:

I traded all my dollars in for hamsters today.

 -rof 

Just curious why Hampsters.

I invested heavily in Gophers and Moles.

The thinking was that I could train them to till the fields so my helper monkey could lay the seed to grow the feed for the chickens which shall be used as currency.

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#8) On November 26, 2009 at 3:04 AM, FreeMortal (29.59) wrote:

I'm going to try to imagine all the ways gold could possibly go down.  I'm not convinced that gold is going down any time soon, but I just want to explore the possibilities.

1 - Fed tightens monetary policy, Volker style. Dollars retreat from gold for higher interest rates. 

2 - The US is hit with another financial crisis.  This time, there is no bailout.  Banks fail and the money supply drops.  Demand for dollars pushes gold price down.

3 - Stocks really take off next year.  Dollars will retreat from gold into stocks.

4 - As zloj suggests, the catalyst could be foriegn. China and India have their own financial meltdowns.  Demand for currency will push down gold prices around the world.  In addition, more investment dollars will flee from gold for the -now cheap- investments overseas.

5 - Gold is simply overbought due to irrational panic.  All it will take is a hole in the dike.

 

I'll be the first to admit that the first two are very unlikely.  Options 3 and 4 are a bit more probable, and option 5 may be the most likely.  Just a foolish guess.

 

If you have more scenarios, please chime in. 

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#9) On November 26, 2009 at 5:45 AM, cbwang888 (25.90) wrote:

If you pay gold in AUD dollar, then the gold price actually go slightly down since March.

For euro people, the gold only started to move in Oct.

Focus on the USD drop. Gold is just one of the mean for central banks overseas to diversify their portfolio against USD.

The fun of gold (5+ years bull market) has just started.

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#10) On November 26, 2009 at 10:45 AM, Judochop172 (27.71) wrote:

#7 I traded all my dollars in for hamsters today.

Me too. The hottest toy this year is the zhu zhu pet hamster. $10 at walmart if you can find them. There going for $40 on ebay.

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#11) On November 30, 2009 at 12:17 PM, Antipopnfresh100 (41.54) wrote:

If you really want to see the gold bubble, look at the price of gold in Indian Rupees, or Japanese Yen, or the Euro.

http://www.goldprice.org/gold-price-history.html

In the 70's the price of gold skyrocketed relative to the dollar do to U.S. inflation (gold crashed in the eighties, btw).  Today it is skyrocketing relative to everything.

Is every currency on the planet going to experience hyperinflation?  Or are people just afraid to be in stocks at the moment?

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