How come in 2001 for example I never heard the world "Gold" on the TV or radio or from joe six packs and soccer moms etc.. when gold was trading under 300s ? Now you hear all the time "GOLD" on every corner. Just like you heard "House,property" on every corner during the housing bubble.
George Soros on Bubbles: 'When I see a bubble forming I rush in to buy, adding fuel to the fire.' http://blogs.ft.com/money-supply/2009/11/02/introducing-the-theory-of-reflexivity/
How come you dub yourself 'king of shorts' and you don't realize the importance of the gold investment now? One does not call himself 'king of shorts' for nothing.
Are you a broker or something? Gold hasn't even given the parabolic signal yet and public participation is still miniscule. What about the dashed hopes of investors since 2000? A repeat of 1980s and 1990s look like a pipe dream at this juncture.
people are buying gold to preserve wealth or capital..gold is as good as cash. people would take gold coins for payment if you want to buy a new car with gold.
Even if you were the 1 guy that bought gold at $850 in 1980 and you sold at the absolute lowest price gold hit the very next year, you only lost about 50% of your investment. In reality, those people who bought in the first half of 1979 (when gold was trading under $300 per oz) most were still sitting pretty by the end of 1982 when gold was trading at $450 per oz.) 50% return over 3 years is hardly losing your shirt. Yeah, in the 1980s might have been a good time to invest in those safe companies, like WorldCom/MCI, Enron, Global Crossing, Adelphia, Tyco, Bear Sterns, GM, Washinton Mutual, Refco, Delta airlines...you know...the big, SAFE, diversified investments. How much those guys paying today? Also...there are not many average people buying gold. They are SELLING old gold jewelry to these "We buy Gold" corporations. But even if they are buying gold, you know when else people were buying gold? During the fall of the wiemer republic. Those few people that bought gold did pretty good. Another time gold came in handy was during Vietnam. I met a woman who had to pay in gold to get herself smuggled out of the country. Same in cambodia. If you wanted out of there when the SHTF, you had better have some gold. Same with the Jews. The ones that had some gold were spared from the death camps as they could pay to get themselves smuggled out. There are many other examples, but you get the point. I'm not saying dump your whole portfolio in gold & silver (unless you only have under $10k or so), but its better to have the gold and not need it, than to need it and not have it. If you have $100k to invest, whats wrong with buying $25k in physical PMs and $75k in stocks? I mean if the worst happens with gold and we have a repeat of 1980, you lost what? $10-15k total? You still have your $75k in stocks so you only lost 10-15%. If the worst happens and its total collapse, you at least have a way to survive, get out of the country, hire people to protect you, get food, start a business in your new country, ect.
Possible scenario. Gold continues higher, much higher. Joe 6 pack joins the buying frenzy. Geo political uncertainty, the specter of rampant inflation,Piigs, major municipal failures, fill-in-the-blank disasters that hardly anyone realized at the time but seem eerily obvious in hindsight, throw in a spot of international - and home grown - terrorism. The list goes on. Rumors of a serious International collaboration to incorporate Gold into some sort of Global monetary mechanism makes headroads. Gold heads higher...and higher. It's now a bona fida bubble but,as with the RE implosion, it seems that everyone is too busyraking it in to notice. The bubble continues to expand. Gold hits $2k Hollywood stars demand payment in gold bullion. The rumors of a new World currency standard are given further impetus through planned leaks which are hastily denied. Eventually a lesser head of State blurts out that there is some validity to the rumors. Then a European leader goes on record stating that a World currency is inevitable. A few months later all the G8 ministers gather in Switzerland and the plan is unveiled with great pomp. B.O. waxes lyrical about this being a truly defining moment in history, that a new era of transparency has dawned. His re-election assured, the details eventually dribble out.The free markets of the World will determine the benchmark price of Gold. B.O.is nominated for a Nobel peace prize and is re elected in a landslide. All is going so well and then the inexplicable happens. The price of Gold drops sharply and unexpectedly. Market experts, pundits and assorted talking heads are quick to reassure the good old general public that this is no cause for alarm. In actual fact this is clearly the buying opportunity of a lifetime. Sure enough price spikes up again but only makes a lower high. Still the concensus is overwhelmingly bullish. However, price starts to crater. The Central banks,after having significantly reduced their inventory of bullion at artificially inflated prices are now set on another major kill. Obviously they (we might say the House) have absolutely no need for Gold over $2k. The decline is horrific. Only the most well capitalized of the players survive the fearful swings in price. A fortunate few make a fortune but at the expense of the many. A year later Gold is trading at less than $500 per ounce. Another burst bubble.....and the show goes on. JMO