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roy piper Comments (119)
 
First, you need to establish that gold is in a bubble, and you have not. Why is gold in a bubble? What is your definition of a bubble? The amount of base money printed has tripled he last decade and so, as any Classical Economist would tell you, gold will triple as the value of each dollar drops. Seems quite rational to me. If we double the amount of money from this level, I expect gold to double from here.

From 1970-1978 gold went up triple, to an all-time high of 120. That did not stop it from going up 700% the next two years.

I agree that if you hear your plumber talking about gold then it is probably headed for some kind of drop. But right now the average American has less than 1% of their portfolio in gold. That is hardly a bubble. More shares of MSFT trade in a single day than all of the gold ETFs. That is hardly a bubble.

The fact that so many people are saying what you are saying about gold tells me that it still has a ways to go on the upside.
26 Nov 2009, 03:00 PM Reply Like

DeepValueLover Comments (5084)
 
From a fundamental point of view gold is likely undervalued.

Gold prices do not directly reflect the amount of dollars printed by the Federal Reserve. Between 1981 and 2000 the U.S. Government set forth fiscal policies that made sure deficits grew (save for the last few years of the century). A chart should show a steady rise in nominal gold prices but it does not.

A bubble is never truly identified until it pops. Most people did not have most of their 401k money in tech stocks in 2000 (most retirement funds were in government bonds, investment grade corporates and large cap funds).

I believe a sudden drop in gold to the $700s or even $600s is possible if not likely in the next few months before another huge run up into the $1k to $2k range and beyond over the next few years.


On Nov 26 03:00 PM roy piper wrote:

> First, you need to establish that gold is in a bubble, and you have
> not. Why is gold in a bubble? What is your definition of a bubble?
> The amount of base money printed has tripled he last decade and so,
> as any Classical Economist would tell you, gold will triple as the
> value of each dollar drops. Seems quite rational to me. If we double
> the amount of money from this level, I expect gold to double from
> here.
>
> From 1970-1978 gold went up triple, to an all-time high of 120. That
> did not stop it from going up 700% the next two years.
>
> I agree that if you hear your plumber talking about gold then it
> is probably headed for some kind of drop. But right now the average
> American has less than 1% of their portfolio in gold. That is hardly
> a bubble. More shares of MSFT trade in a single day than all of the
> gold ETFs. That is hardly a bubble.
>
> The fact that so many people are saying what you are saying about
> gold tells me that it still has a ways to go on the upside.
26 Nov 2009, 08:53 PM Reply Like

Tom Au Comments (6707)
 
Apparently, Joe Kennedy felt in 1929 as you did in 1999 about shoe shiners and other blue collar types getting too comfortable with the stock market.

And years ending in "9" tend to be dangerous, anyway.
1 Dec 2009, 10:57 AM Reply Like