Evidence We're in a Gold Bubble?
Now I’m normally not one to disagree with friend and colleague Chris Barker aka TMFSinchiruna on, well, just about anything metallic that comes out of the ground, but I am going to raise my hand and “ask are we sure we aren’t in a bubble?” Because I’m seeing some bubble like behavior out there.
Chris eloquently and thoroughly articulated why you should own gold in his fantastic 2 part series The Top 10 Reasons to Hold Gold, Part 1 and The Top 10 Reasons to Hold Gold, Bar None. He even went the next step to debunk 5 popular gold myths. That said, we should step back periodically from all of the fundamental reasons for gold’s ascent and look at what is going on around us.
Sitting at home tonight, longingly reminiscing about the good times (oh, how I miss my 07 portfolio balance) and pondering our bubble-hopping natures, I recall investing clubs in the tech boom and cheap late-night mortgage commercials that could be, at best, described as predatory during the real estate boom.
So as I surf the series of tubes known as the interwebs while glancing at my TV, I’m simultaneously hit by 3 related investing red flags. Individually I might have disregarded them, but together I’m struck with a familiar feeling: I can’t lose money with investment x because this time, its different!
The three horseman of the potential gold apocalypse are:
1. Cash 4 Gold (and similar companies)
2. Gold Parties
3. Gold Vending Machines
We’ve seen “get rich” TV commercials before and we’ve seen social gatherings based on the newest fad to hit suburbia before. But vending machines?!? And I'm not talking about vending machines that are gold colored, or even made of gold. No no, I'm talking about machines that dispense gold.
You mean I can buy gold at 500 locations in Germany for only a 30% mark-up over the spot price? What a deal!
Way to think outside the box German goldentrepreneurs. I take my jester cap off to you for your over the top display of naked capitalism combined with asset class bandwagoning.
Now I’m not saying we are in a gold bubble, I'm just saying this behavior looks awfully familiar too me.