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Lets Party like it's 2007! Gold can Never Loose Value Just Like Real Estate?

|Includes: SPDR Gold Trust ETF (GLD)

This Bubble may have a gold tint!

I love to exploit and meet market trends and I see a big changes in the price of GLD and overall falling gold prices.  I am philosophically a gold bug.  I like the stuff, gold is a historic store of value. I think that the governments will print paper money like there is no tomorrow. 

The problems I see with GLD is that is it not real gold. 

If it was real gold?

  • You would not have default risk of the company running the investment. 
  • It may help you in case of a catestropic emergency. 
  • You might have a chace to to hide it from an out of controll government.  

So I feel GLD is truely overvalued as you are not getting the preimum over the gold price to take the risks associated with the differences between GLD and gold.

Now how much is real gold worth.  Everybody makes the argument that gold is more valuable than paper money so trade all your paper money for gold right now.  It is true that the paper money may be losing value but why buy gold. 

Can you not Buy?
  • Stocks of companies who will do well in inflationary times
  • Oil
  • Real Estate (which did come down despite what all the brokers said)

Also I see the same type of people in the retail gold business as were in the mortgage business during the crazy 2002-2005 mortgage period.  I met a gold buying company the other day who was bragging about how much he was spending in advertising.  I asked him if the price of gold stabalizes or goes down would his business model survive.  He looked at me just like my mortgage broker friends looked at me in 2006 and said I was crazy to think that gold would ever go down. 

Gold can and will come down.

So I would advise get out now or at least protect your GLD investment with some out of the money options which would insure you do not loose all of your money.


Disclosure: No position