GOLD AT 5,000??? Bubble or super depression.

Discussion in 'Economics' started by jueco2005, Jun 14, 2011.

  1. Some are already predicting gold to be 5000.

    But Gold at 2500 or 3000 could mean a bubble for sure.

    I mean......Can the world economy sustain such an increase in gold prices??

    I think that if it reaches 5,000 is because GOLD would have become the economy itself.

    For the moment I am seriously considering to buy some.
  2. Actually yes if they start using it as a reserve currency again.
  3. I'd buy property or stocks instead of gold. The likelihood that Gold becomes a reserve currency is pretty remote, and gold seems overvalued relative to everything else.
  4. Your whole premise is ridiculous and indicates you don't understand economics. GOLD prices can go up and down and they have ZERO effect on the world economy. Nobody "needs" gold. It's not an input into the economy.

    GOLD is pretty much its own deal. Sure, world economies can stagnate or drop, but this is not caused by GOLD.

    "Can the world economy sustain such an increase in gold prices??

    This is one of the funniest statements I've ever read on this site.
    Of course the answer is YES, but its a pointless question. The GOLD price is irrelevant to the world economy. Let me try this game :

    "Can the world economy sustain if the Chicago Cubs finally win the World Series ? "

    Again, I'm inclined to say YES. Let's try again, but closer to your premise ( isn't this fun !!! ) :

    "Can the world economy sustain an increase in licorice prices ?"

    Well, YES seems to be the answer again. One more.

    "Can the world economy sustain if the prices of Potash and Oil go way up"

    Uh Oh. End of Game. The world economy still needs Potash and Oil. A shortage of either has real implications. GOLD on the other hand ? One less piece of jewelry in India isn't going to matter much, if their car is out of gas, or there is no bread on the table.

    Wow that was fun. Sure go ahead and buy GOLD, it might even make you money. But don't think for a second the world economy requires GOLD.
  5. moarla


    as long as the money creation out of nothing without any realistic background continues, price of gold (and others) will rise.

    gold is money
  6. I have a BS in Economics. I think at least I have a clue.

    Gold like any commodity can be abused and become a buble.

    Its real price depends on the amount of dollars out there, its supply and demand.

    Demand has been fueled by fear, new currency and speculation.

    But just like it happened in the housing market a house can't be worth more than what people can pay for it or we would have market failure. ISNT THAT WHAT IS HAPPENING NOW WITH THE HOUSING MARKET???

    That's why a5 3000 or 5000 it is more a sigh of hell than a sign of prosperity.

  7. When I first started this thread gold prices were at (basically) todays value. Anyone care to explain such extreme volatility.
    In the mean time allow me to say that (if there is a bubble) the bubble has not taken off yet.

    Gold is likely to decline further in price if there is economic recovery which is very unlikely in the short run.

    The extreme volatility in gold prices are proof enough that it is an instrument of speculation and bubble. WATCH OUT.
  8. DeJaneiro


    Really, I agree somewhat with Jueco. There looks to be a higher demand for Gold because of its history as a money. Its demand seems to be driven by the idea of it being a "safe-haven" from fiat currency, falling equities, and pessimestic outlook for soveriegn bonds (esp EU). Gold is still regarded as a money by many financial instituions, hence why BoJapan has billions in gold reserves. I'm not sure of the top-out of gold (esp 5000), but I can see a high demand for gold as investors flee from equities and bonds, bc the have to shift money somewhere. And once it reaches a very high level, then the demand for gold will not be there any more. Investors may start selling and less will be buying. After the shift has gone from BUY to SELL, a quick fall in price would be the follow-up.

    If Greece bankrupts (or when), and equities fall, what investment instrument will be in demand? Gold surely is high on the list.
  9. One of my definitions of a bubble is when more and more people assume the item in question (in this case Gold) will keep going higher and higher.
  10. Clue perhaps.

    Two economists went duck hunting last autumn (I didn't use the word fall since it might be confusing). One shot to the left. One shot to the right. When they averaged the two shots, they pretended they had duck dinner for supper. Then over brandy, they discussed "J" curves, Phillips curves, and equilibrium.

    A good time was had by all. This includes the duck that flew away amidst all that mis-allocated buckshot.

    Inflation-adjusted, bullion is no where near a bubble. Senior mining stocks have operating leverage based upon extraction cost versus bullion price. Juniors go along for the ride. There's a clue in there somewhere.
    #10     Oct 4, 2011