how you know Gold is NOT a bubble

Discussion in 'Commodity Futures' started by Optional, Dec 14, 2009.

  1. No one owns it. Its not like tech stocks and 401K's which exposed everyone to equities.

    I was at a Stag in Vegas this weekend and there were 30 guys from all over the world in the penthouse. Lawyers, doctors, professionals. Only 2 of us held some physical gold and silver. The rest had none.

    NOT a bubble.
  2. Gold is as close to a purely speculative "asset" as there is in this world. It is in a bubble at virtually any price.
  3. Nonsense. Its not even close to bubble status and its not a speculative asset in non leveraged form. Its a hedge which no one owns.
  4. AyeYo


    Do you know how I know gold IS a bubble? Because there's now an official "gold is NOT a bubble" thread on ET.
  5. How many of them owned crude oil in the Summer 2008? It still imploded 70%.

    Knowing something is a bubble or not doesn't give you much of an edge trading it. A simple stop on the way up and down is much more effective than trying to decipher crowd psychology IMO.
  6. Pekelo


    The answer is actually very simple. As long as gold goes up as much as the dollar weakens, it is not in a bubble. When it still keeps going up, inspite of the dollar getting stronger then the bubble occurs...
  7. AyeYo


    "As much as"? What's the exact correlation between them and how do I know if it's going up "as much as" or "more than"?
  8. Pekelo


    Good question. I usually don't watch them closely, but to get the correlation, try to pick a period when neither was moving based on news or other fundamentals. I will take a look later...

    Edit: A quick look if I got that right shows, that based on the last 2 weeks movement Gold dropped ~8% while the dollar went up 4% thus the correlation is 2% move for every 1 % dollar move, assuming in the last 2 weeks all the gold's move was because of the strengthening dollar.
  9. Yes but no average investor buys crude oil as a hedge against disaster. That's what you need to own precious metals as a hedge against. A little Tylenol never hurt and most don't have it. When they all have it, then it'll be spec excess.
  10. If it were a bubble, just any old crap bullion coins and small bars would be scarce. As it is, only the top quality are scarce now.
    #10     Dec 15, 2009