Are you worried about a correction/end on the gold 'bubble'?

Discussion in 'Commodity Futures' started by Daal, Apr 13, 2007.

  1. Daal


    Lets see the facts. In the last gold bull market in the 70's gold spiked a high in 75 then it went down for ONE year and a HALF, it only broke the 75 high in END of 78(thats three years worth of doing nothing). Plus supply and demand was REALLY out of whack back then. With the price of gold fixed for so many decades mining companies had very little incetive to go after gold plus you had a lot of people who wanted to own it and couldn't so when bretton woods fell down things went wild.

    Right now things are totally different, most mining companies only go after gold(75% of explorations). Gold is getting more and more mainstream. The marc fabers of the world who says gold is going to $3,000 might very well be wrong
  2. an opinion....

    the Fed. will let the dollar die in leu of raising rates and collapsing the equity/housing bubble......

    they have little choice due to Greenspan allowing rates to stay too low for too long

    next week should be worth waiting for....
  3. Realist


    nope. no bubble, far from one developing actually. inflation adjusted gold price should be around $2200.

    gold/commodities were in a 22 year secular bear market and we are now about 5.5 years into a secular bull market, there will continue to be significant price appreciations in Energy, Metals, Grains, etc.
  4. Some actual facts:

    1 - Trade-weighted Federal Reserve Major Currency Index, Monthly:
    Note that the dollar has been, as that cited article states, perched precariously on the 80 line for a while. I don't know what happens if it dives below 80, but I can't imagine it would be good.

    2 - Using the BLS' Inflation Calculator, available here (click on the link right under "Get Detailed CPI Statistics") you can calculate what inflation was between any two periods. I used 1914, when the dollar was 20.67 to an ounce, and 1935, after the devaluation to 35 an ounce, as "from" dates, and the dates 1971, when Bretton Woods was ditched, 1980, the top of the bubble, 2001, the post-bubble bottom for gold, and this year as "to" dates. Basically, to make a long story short, we'd have to get to about 1500 to match where gold was in 1980, based on the average prices for gold according to kitco in the years cited.

    My opinion is that we're very close to a point where the average person is going to realize just how deep the hole is for the dollar, because if that 80 line is breached, well, there's no support for the dollar below that line. We will quite literally be in uncharted territory.
  5. Realist


    "So far the Dollar Index has tested the 80 level five times in the past: 1978, 1990, 1992, 1995, and 2004. On several of those occasions it took massive, coordinated interventions by all the world's central banks to rescue the dollar. However, given the enormity of today's imbalances and the sheer number of dollars in foreign hands, such a bailout seems unlikely."

    Although I don't agree with him about the broader markets and real estate crashing once the DX breaks 80, I do agree that bonds could selloff badly.
  6. How do buy gold?
    As a stock?
  7. Doji7



    Take a Prozac guys

    Who win with dollar crash ?
    Asian Central Banks??
    any other winner with dollar crash predictions...

  8. Daal


    exactly. I'm not confortable betting my money following suggestions from people trying to pick a top on the US dollar history. Specially given the fact the they've been wrong many times in the past.
  9. Realist


    did anyone here say anything about a crash? the commodities bull is about much more than just the dollar. spend some time to figure it out on your own.
    #10     Apr 15, 2007