Commodities were just an example. My point was that anything - even gold - can crash 50, 60 or 70% without first going into a gigantic 5,000% mega bubble. These bubble play books may be interesting for psychologists but worthless for trading in my opinion.
So you wouldnt agree there was a correlation between the end of the world that finally had arived and one of the greatest stockmarket rallies in recent history?
You want to know why gold is not in a bubble? Ask anyone who knows nothing about investing, economics, or how money works if they would buy gold for 1150 per oz. 99% of them will tell you no, they would not. Now when these people that know nothing about investing, economics or how money works start buying gold...thats when you know its a bubble. Just like they did with housing. But those people are not buying gold. They are selling gold to cash for gold people(at prices that probably equal about 300$ per oz, maybe less.) When those cash for gold places start going out of business, then start looking for a bubble because people are not selling.
Ok explain the following: Peak Gold: http://rawstory.com/2009/11/canadian-gold-mining-group-declares-global-production-terminal-decline/ Running out of gold http://www.businessinsider.com/south-african-gold-reserves-running-dry-2009-11 Gold represents a new currency http://www.ftadviser.com/Investment...nts-new-era-for-currency-markets-says-RBC.jsp No Bubble Here... (*cough b***t cough*) The moment I heard Peak Gold I said, Yupe we are in a bubble. There can be no peak gold because we have not run out of gold. It is just hamstered away in a hole in the ground. To run out of gold would imply no more gold, but that is not what we have. Here is the rational of gold. You hamster it in a hole, so that you can say you have X billions. YET nobody spends it because the moment anybody spends gold, the price of gold collapses. Remember the central banks of the world had to come to an agreement to only sell so much gold for fear that the price of gold would continuing collapsing. Putting it simple. Gold is a pyramid scheme! Because the more that is hamstered the bigger the collapse will be once people start to spend it...
As I posted a few days ago, they believe there is 10-20kg of gold in every cubic Km of seawater. Gold is not limited, the higher the price, the more that will be unearthed and sold. And technology is relentless at cheaper, faster, deeper, more, etc.
Here is my post about Gold's Parabolic Arc and Inv. H&S Patterns.. http://www.elitetrader.com/vb/showt...22&perpage=6&highlight=gold suri&pagenumber=9 Regards, Suri
Can't you say that for anything though? How about the US dollar? You could certainly argue in the same way that it is a pyramid scheme. At least the Federal Reserve can't print gold at will.
Those cash for Gold business are profitable because there is a demand for gold in pure forms and gold is worth 1000/oz but they will go out of business after gold collapses. What happens to gold if Bernanke starts jacking up the rate? I don't see gold being attractive when rates start to rise. Right, now I agree there is money pumping killing the dollar and driving the price of gold. Gold is moving because of the uncertainty around the dollar primarily. If the FED and Treasury decide to coordinate to prop up the dollar, Gold will be hit. Gold is a trade not an investment.
Given the recent history of the Federal Reserve, the odds that this happens anytime soon is infinitesimally small.
What? Central banks had to come to an agreement to sell gold in an *orderly* fashion because prior to the original signing various central banks were dumping gold in a totally chaotic way. Selling anything in large quantities in a chaotic way would cause it to be devalued. You think tomorrow that if 9 of the 18 signatories to the Washington agreement dumped the USD that it wouldn't tank? This is not a property of gold that you describe, just basic supply and demand. Furthermore, the latest renewal of this agreement has the signatories selling 100 tons *less* than before.