freefall51

The Next Bubble?

Something does not add up here. The price of gold seems to have topped out Jan 08 and it appears to gradually break down. There is still commodity unwinding going on which elevates the $ for another year or so, ie deflation. The customers are tapped out, credit cards are at the limits, the house prices down, the 401ks destroyed. Nobody is feeling rich. Lending practices will tighten no matter how much money supply there is. The christmas business is already in the tank, and jewelry is part of it. What else can you do with gold? Oh you can bury it in your backyard. In a situation like this the consumer will keep his hands on his wallet and not be willing to spend for discretionary stuff. There is no intrinsic value for gold. It is all supply and demand. There demand destruction now. Sounds familiar? If we are really in a recession/ depression gold will go all the way back to where it was in 2002, when we came out of the last recession.