We're all mere mortals... I would love to have an objective test that would help me understand whether gold, for example, is a bubble or if it's undervalued.
Gold is the ultimate currency , an ounce of gold could buy 20 barrels of crude in 1972 , at $3.50 and and $70 for gold and in 2012 it still gives 17 barrels at $96 , so gold is still maintaining it's value. With rising world population and demand ,oil is expected to reach $200 , that would bring in inflation and a gold price of around $4,000.Gold is not in a bubble .The costs of the far east can only increase ,leading to higher inflation world wide , and gold will the ultimate hedge , maybe it is undervalued. The real bubble was the financial system and the financial bubble , wall street and it's crooked ponzi scheme to get investors to part with their money and give it to the wall street mafia.The only thing that was a bubble , and still is , is the financial bubble.Central banks are still re-inflating it. There is no air in an ounce of gold , so no bubble.
I'll bet you wouldn't really. So the markets you trade would switch to step function changes and you are now unemployed as computers take over? An event occurs that makes you an instant millionaire or instantly bankrupt every day? Is that the world you want? I think that traders are only as good as their own ability to evaluate subjectivity/objectivity/knowledge. Descartes' famous saying, "I think therefore I am" is about ultimate objectivity. It means to me (anyways) almost everything is subjective when you get right down to it. We have many modern day religions like science or politics that rely on base theorems that ultimately can't be proved in the system that uses them to prove others. (I am simplifying here a bit. This is from another couple of famous names, but very difficult to read so I omit them.) In the outer reaches of modern quantum science, the theories become little different from philosophy. If something is not provable, is it science, religion, or philosophy? (Whoops -subjective again.) If it is so that we all have worlds that are set simply by our own beliefs of what is truly out there, then we must all be Gods. After all, isn't God the one that creates the world that we see? BTW, Descartes was shown to be incorrect by someone who came along later and pointed out the error inherent in that simple statement. So close, yet so far.
OK, so according to your logic, platinum, for example, was also a real bubble. 'Cause in 1972 an ounce of gold used to buy something like 1/3 of an ounce of platinum and now it buys nearly 3x of the very same metal. Similar with silver. Can you explain this to me? Note: all my data comes from Kitco.
It was a rhetorical statement. I don't seriously think that such an objective methodology exists out there.
My stab at this key question ..... ... a ponzi scheme goes into exponential growth and ultimately most investors lose everything and are wiped out never to use the same money to invest again. .. a bubble goes into exponential growth and ultimately most investors get some of their money back and are still around but talk about their bad investments and how they will make it back again by investing more shrewdly in the future. By that definition, as an example, Bernie Madoff's scheme would be correctly called a BUBBLE due to Irving Pickhard's contributions.... and MF Global, PFG, and the regulator scheme would be correctly called A PONZI SCHEME until the money is recovered by the investors.
I can explain about silver , equal monetary value of silver to gold would incur much more storage costs , and silver is more difficult to store and trade .If silver was same price as gold in 1972 , it would probably have increased about 70 % of gold . Gold is the orignal currency of the world , platinum and silver do not hold the same status. There is no demand from central banks for platinum or silver. http://www.forbes.com/sites/robertlenzner/2012/01/28/gold-is-the-hottest-currency-in-the-world/
Isn't the U S social security a sort of Ponzi scheme?The government is relying on creating inflation and higher payments through inflated wage rises of new contributors , to pay the old investors in the scheme. The U S government does not really have the money , it is relying on new investors to pay the old. http://www.nypost.com/p/news/business/us_debt_to_pass_YorannQiQY7NYfQcOQg9pI http://blogs.wsj.com/washwire/2011/09/08/is-social-security-a-ponzi-scheme/ Wall street Ponzi scheme If new investors stopped paying new money into Wall street , what would the outcome be?