The coming "Gold Bubble"

Discussion in 'Business & Economics' started by kororoti, May 1, 2011.

  1. kororoti Registered Senior Member

    Everyone thinks we're avoiding the mistake made in the Great Depression by allowing the Federal Reserve to print more money (so the money doesn't end up under a mattress - leading to deflation), but...... massive land investment (or more recently, gold investment) serves the same purpose. Putting it somewhere that doesn't involve actual physical production is the same as putting it under the mattress. It leads to the same economic slow down.

    We all saw what happened with the real estate bubble. Land values got pushed to the point where the price of land was higher than anyone would reasonably pay if they weren't trying to invest in it. (Like say, if they just wanted a place to live.) And when people realized that, they started selling and it crashed.

    Very likely there will be a "gold bubble" soon too, because its prices are starting to get to unreliable highs as well. If too much of the value of the USD is reflected in gold ownership, and the price of gold suddenly bottoms out, what will happen is the USD will do exactly what it did after the real estate bubble. Loans based on gold will fail, and..... we've already seen the rest.

    I think there will be a lot of these bubbles if we are not careful.
    Last edited: May 1, 2011
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  3. Pinwheel Banned Banned

    When people start borrowing large amounts to buy gold, then I'l worry about the bubble.
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  5. kororoti Registered Senior Member

    Yeah. People probably won't be taking out loans to buy it, but I would be just as worried if they started using gold stockpiles as security for mortgages that were being taken out for another purpose. That's the main issue. The bubble bursts any time it creates bad debt.

    Anyway, there is a special form of gold called "securitized gold" which is where you buy a certificate, rather than the bullion. This guy explains it pretty well, though he uses a bit of profanity. Take it for what it's worth. Apparently some of these certificates are getting sold to multiple claimants, making the amount of gold out there seem larger than it is.
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  7. Me-Ki-Gal Banned Banned

    I would worry about the crash of commodities in general . If we see that next year then it is going to be bad bubba . It might happen if gas continues to spike . Let the hurting begin . If gold crashes it could mean a recovery is truly in the works . As long as gold is rocking upward I am personally concerned about any real recovery . The money maker and shakers are fleeing for cover is what it tells Me . The assault on business continues.
  8. nirakar ( i ^ i ) Registered Senior Member

    Gold will collapse when there is a stable trustable alternative to Gold. The current price is not based on the value of gold as a material for jewelry and electronics but rather is based on all the currencies being untrustworthy.
  9. jmpet Valued Senior Member

    And when is this "bubble" going to pop, oh seer of things? LMK exactly when gold will lose value.
  10. Believe Happy medium Valued Senior Member

    I think there is a bubble and it will pop but the question is when. All the big investors have hedged their bets and now (in the USA anyway) they are trying to attract the common man investor to push the bubble up that last couple of $$$$$ before they get out and it pops.
  11. jmpet Valued Senior Member

    So you're telling me "there is too much gold out there", right? Just want to be clear on this one.
  12. Quigly ......................... ..... Registered Senior Member

    If the dollar stabilizes, gold and silver prices will fall imo.

    Silvers big price drop yesterday was due to the increase on leverage ( i believe it went up to 39% and people had to sell off because the margin increased. There was also profit taking that caused fear and commoners sold off as well out of fear. It really though was way above is 200 day moving average, so it was bound to happen.
  13. Michael 歌舞伎 Valued Senior Member

    Not if you have to HAVE possession of the Gold in the vault. Then you'd lend out a note that represents said gold. I think???

    That said, as they say, Gold end in tears....

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