If (or when) gold bubble bursts....

..I bet it will be VERY hard to find physical gold. No one will want to relinquish their gold for $600 and oz when they paid $900+.

 

Log in or Sign up to hide this ad.

Ever since the business press failed to recognize the tech stock bubble that burst in 2000, every price rise is called a bubble. In the case of gold, it is barely above the high price of 29 years ago, hardly a bubble. When gold stocks are the best performing group for two or three years in a row, and gold stocks are booking record profits, and gold stocks are the star holdings of almost every portfolio, then it will be correct to speak of a gold bubble. For now, it has to be considered a very out of favor asset class that has almost invisibly performed very well since the turn of the century.

 

gold price isnt a bubble, its a reflection of the weak dollar. if, or when, the dollar fixes itself, gold will fall.

 

I disagree. I think if gold came down to $600 there would be a lot of new buyers, myself included. People know that gold can't go to zero, unlike lots of other assets.

 

That's what he's saying. There WOULD be thousands of new buyers but nobody SELLING.

And I agree with the statement. Gold would disappear or the current price tags would be left on everything.

I don't believe it will go to 600 again now. After what we've been through, the status of the dollar, hyper inflation around the corner, and seeing the prices now and future expectations, etc.... the demand would be so high, the market wouldn't allow it to fall that much again. Or be sold that low. The new bargain prices are probably right now. Sadly. I missed the boat growing up. Countless opportunities squandered.

 

You just AGREED with me. I am saying that there will be a lot of buyers but no sellers.

 

...about that hyper-inflation thing. Intuitively you would think that inflation would result from creating more money, but there are a lot of other factors. Inflation may not be the result. We are in uncharted territory.

 

the classic cause of inflation is "too many dollars chasing too few goods".

I agree with what your hinting at above.... with the several trillion dollars that have been lost in the equities market alone.... the printing presses would really need to run full time all the time.... to make up for the "missing dollars" from the stock markets. I think I remember reading a few weeks ago that the equity market losses were estimated to be around 4 trillion dollars.

re: inflation... the Fed Reserve and other govt agencies will be monitoring for early signs of inflation and have a lot of tools with which to combat runaway inflation.

One sure fire way to control inflation is to control the credit markets--- and it looks like the days of "manufacturing and selling credit" as a stand alone product are long gone. Which is a good thing.

 

well ur always funny. with phoenix departing we will call u the new third stooge

 

The problem with Gold is that there is all of this paper garbage out there with no backing. That is what it driving the prices. There was a big article the other day on Kitco about it. They fear there is going to be a gold bubble bust.

 

I don't really worry about that. It's true that paper gold, the futures market, and the OTC derivatives market can play havoc with the gold price, but over time physical supply and demand will set the price. In a sense, you see it already. Physical gold prices are starting to become uncoupled from the futures price. We may reach the point where the gold spot price [the paper gold price] is fairly useless in determining what the physical gold price should be.

 

this is the bursted bubble prices are only going north from here. spocks prophecies

 

I think that is the article that got me thinking about it.

 

That is what I was hinting at in the o.p.

 

no way jose. only if gold reach $2,000.00 to $3,000.00. then we can talk about that.

 

i think Gold will go up fast with places like Cash For Gold there will be less out there..

 

Cash For Gold is a small player in the overall gold market Their purchases have no effect on the price of gold. They buy scrap gold, refine it and sell it so the gold is back on the market instead of being consumed.

Cash For Gold only pays a fraction of the value of the gold they buy. Informed sellers would not sell to them but there are enough uninformed (or unmotivated) sellers to keep them in business.

 

Can gold go to $600? I don't think so.

If there are a lot of buyers, but few sellers, the price goes up. If gold were to go down to $600, it would mean there are a lot of sellers and few buyers. That could happen if people think they can make money in the stock market, they'll sell their gold to buy stock. The government can print all the money it needs to. They issue Tbills, and the chinese buy them, because what else can they buy with american money? Eventually they'll just buy the country. The Indians have all the motels, the arabs have all the gas stations, the chinese will buy the rest. With all the zillions of dollars being printed, some of it will bid up the price of gold, even without inflation. All those dollars may not even cause inflation. In out post-industrial age, the more demand there is for something, the more of them you make and the cheaper they are. We're in uncharted territory.

 

The paper price will go down and the physical gold will disappear from the market.

 

Paper price

I've always wondered about the "paper price". If there is a paper price, but no product available for that price, then the paper price could become irrelevent. We could face confiscation, like under roosevelt. What would that do to the price of gold (for those of us who refuse to give up our gold)? Especially if selling or buying gold became illegal.