In the past, I've made various comparisons to analyze the current gold bull market (e.g. vs NASDAQ bubble, vs S&P 500). By numerous measures, the current gold bull has not yet matched the bubbly peak we've seen during other bull markets.
Perhaps the most in-our-face comparison is gold vs. gold. As far as gold bubbles go, today's investors ain't seen nothin' yet.
The chart below compares the current gold bull market (2001-present) with that of the 1970s (ending with the 1980 peak). To calculate the cumulative appreciation, the data compares the lowest low with the highest high within each bull market.
It is clear that the last gold bull market far surpassed that of today. In fact, to reach comparable appreciation levels, today's gold price would have to hit $6200/oz! That's more than 220% higher than the recent peak.
While many people are saying gold is currently in a bubble, today's crowd mentality simply is not comparable to the mania reached during the last gold bubble. When the 1970s gold bubble hit its peak in 1980 people were lining up in the streets for hours to buy a gold coin - the last gold bubble ended in a classic retail buying panic. In contrast, today's gold market psychology is still relatively benign.
Conclusion: while I'm not necessarily predicting gold prices to rise to $6200/oz, I do feel the bubble talk is overdone. When compared to historical bubbles, gold has plenty of room to rise before becoming a true bubble.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: I am long gold. This is not advice. While Plan B Economics makes every effort to provide high quality information, the information is not guaranteed to be accurate and should not be relied on. Investing involves risk and you could lose all your money. Consult a professional advisor before making any investing decisions.
