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TMFAleph1 (94.92)

Is This ETF Fueling a Bubble?

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May 20, 2010 – Comments (2) | RELATED TICKERS: GLD , GDX , AUY

My thoughts on this subject. I welcome all constructive, informed feedback.

Alex Dumortier

2 Comments – Post Your Own

#1) On May 20, 2010 at 8:00 PM, jlmjlm77 (99.45) wrote:

If someone gave you $10,000 and two choices today on where to save or invest for 5 years.

Option A - Gold

Option B - 30 year U.S. treasuries

Which one would you choose and why?

Maybe TLT is fueling the bubble that will burst first.

 

 

 

 

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#2) On May 20, 2010 at 9:12 PM, Tastylunch (29.26) wrote:

i guess the bigger question to me (that seems to get confused a lot these days)

is

what is the difference between a bubble and a massive bull market?

I think the term Bubble is heavily heavily misued and vague one. It is often overapplied and often inaccurately applie.

I think there is a very very good chance Gold's run is not a bubble at all but rather the early midstages of a world wide generational cultural shift towards preferring Gold as a safety currency. Honestly I think the inflation/deflation question isn't the main driver of Gold rather  just a general distrust of Fiat currency managed bu governments, any government. That's a distrust that I think people are going to remember/cling to for a long time and if this credit mess continues on for some time that could become a semi-permanent sentiment. Just as Great Depression caused a generation that was excessively thrifty here in the US.

I do think the ETFs complicate commodities quite a bit since they are almost certainly exaggerating volatility and speed quite a bit. I think the moves would still happen but ETFs are accelerating the moves by lowering the barriers to "investing" in commodities.

But I've been a Gold bull on and off since 2003 so perhaps I'm not the most unbiased opinion.

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