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Bman409 (< 20)

The Gold Bubble?... how much more to go?



May 11, 2010 – Comments (11) | RELATED TICKERS: GLD , DGP , NEM

I think its healthy to constantly be on the lookout for "the top" in gold.. if we ever stop doing that, it'll probaby be at the top!

That said, I do not see the signs that the speculative run is over, or even yet in the third (and most manic) phase.

First and foremost, the price of gold has been at or near this level for about a year.. we haven't seen that rocket spike up that you see near the end of the mania.. I'm talking about the price of gold doubling within a few months time.

quick..ask someone on the street to name a gold mining company. Just one... I'd say 90% of them could not... during the internet bubble, AOL, CISCO, DELL, NORTEL, even weird stuff like JDS UNIPHASE and PMC Sierra, as well as Qualcomm became household names, like GE, or Chevy.

Finally.. do you see legions of Americans taking to the fields with their pans and picks taking up the new hobby of "gold prospecting"?  Has "I want to find a Gold Mine" debuted on network TV?? How about "Flip this Necklace"?, where the show is all about buying gold necklaces, polishing them and selling them a week later for a 25% profit?

Have we seen that yet?

Have we seen the major colleges recruiting throngs of high school kids in to mine engineering, and geology jobs instead of brokers and MBAs (or computer tech geeks?)

So far, we haven't seen any of that

and we have yet to see some piece of garbage penny stock company with a shady CEO out of Alaska rocketing from $1 to $100 on news of a giant gold find in the Arctic....

We will, though

Verily, verily, I say unto you, all of these things shall come to pass, before the end.

11 Comments – Post Your Own

#1) On May 11, 2010 at 9:55 PM, 100ozRound (28.64) wrote:

The top?  The top will happen when countries can handle their debt and stop printing money. But then a new world currency will be  introduced and you can trade your worthless dollars in for the new currency.  Then you'll be glad you have gold (or silver)


Good post BTW!

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#2) On May 11, 2010 at 10:20 PM, ChrisGraley (28.63) wrote:

There is nothing close to a gold bubble. There is a debt bubble which gold still reacts to even though the price is manipulated.

There is no top until reality!

BTW +1 more rec 

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#3) On May 11, 2010 at 10:28 PM, topsecret09 (83.28) wrote:

  By mid-August the price of gold will be $ 1411.00 per ounce. The dow will be under 9800.....    Lets see how that works out !!!  LOL !!!!     TS

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#4) On May 12, 2010 at 12:52 AM, TMFAleph1 (93.19) wrote:

We are still a good ways from the top of any speculative bubble in gold...

Alex Dumortier

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#5) On May 12, 2010 at 2:36 AM, FleaBagger (27.35) wrote:

I wish Ian would show up and refute all of this. I get creeped out when everybody has the same view as me.

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#6) On May 12, 2010 at 3:28 AM, saunafool (94.43) wrote:

The price points I have in the back of my mind...

$1500 which would reflect the price of gold from before 1971 corrected to today's dollars to account for the increase in money supply (this is a few years out of date, might be up to $2000 now. I haven't done the math in a while.)

$2500 which would be above the 1980 top in gold price corrected for inflation.


Once interest rates start rising so that you can put your money into government bonds and receive a relatively risk-free return of greater than 3%. When you can start buying treasury notes that pay 10% or more, we will probably be in the manic phase as the government will be trying to stamp out the inflation they created.

Of course, any gold bug wouldn't trust government bonds, and they would have been terribly wrong in 1980. Might be different this time, but probably not. Fiat currency is here to stay.

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#7) On May 12, 2010 at 10:32 AM, silverminer (29.77) wrote:

The top this time around will look nothing like 1980.

We will have a persistent 4-digit USD gold price for many, many, many years ... perhaps even perpetually. I expect gold to settle into a new long-term trading range somewhere north of $2,000.

It's WAY to early to be discussing a top. Let's take up the topic once we see actual improvement in the fundamental picture for the USD and the Euro. :)

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#8) On May 12, 2010 at 10:33 AM, outoffocus (24.05) wrote:

Good points. I dont see gold turning around until the bad currency policies turn around. Until then I think gold got some ways to run.

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#9) On May 12, 2010 at 3:32 PM, leohaas (29.46) wrote:

a rec, just for Flip that Necklace!

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#10) On May 12, 2010 at 11:50 PM, hybridinvestor (73.54) wrote:

And yet how many commercials have I (we) already seen for trying to convince folks to "sell" their gold already?  Apparently others don't watch much prime time + later TV...

I will stick to "productive" investments like companies actually trying to solve the world's problems, or to make humanity better, than passive, fear-based (yes, I said won't tell) investments like gold that have very little other use than to give the gold bugs something to buzz about every couple decades or more.

Sincerely, are you proud of owning gold?  What purpose does it really serve?  Is it somehow a "statement"?  Then I have a better answer for you.  Just cut up all your credit cards and stop using them.  Stop using credit.  Stop using anything other that real, tangible barterable goods.  That makes more of a statement than investing in gold in which I would bet 70-80+ of the folks who keep touting gold don't own any substantial amount of REAL, in the hand gold other than the necklace/ring their spouse has bought for them.

Companies selling at small-cap prices rule!!! Rental property bought on the cheap rules even more!!! 

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#11) On May 13, 2010 at 12:01 AM, hybridinvestor (73.54) wrote:

correction:  70-80%+ of folks....don't

Sincerely, gold bugs please step forward and say how many ounces/bars of REAL gold do you have?  Others keep making very very reasonable arguments that holding "paper" that points to "gold in thar hills" is not quite the same.  If you're going to own gold, silver, etc., then do what my friend does and buy actual gold/silver on EBay, etc. when he comes across relatively cheap prices for it.  Then, I might agree you at least own a physical asset.

But remember, if somehow gold does spike it means that most likely the cost of extracting it has also gone way, way up for the companies out there that mine it because it signals strong devaluation of other currencies without finding some new, very important day to day use for it.  So, the cost of other items to actually mine it go way up as well.  I guess they can at least pay "in gold" one could argue. Perhaps.

Again, I tend to invest in the future......of humanity.....not fear and myself that the gold bugs say they don't invest in but they do if they believe their own premise.  I will continue to fund those ventures that are trying to make things better for all of us.  Gold, silver....well they're just passive atoms to me if they don't serve the common good.

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