This is how seasoned commodity traders view the current gold bubble. Whoops! I mean gold rush.
Experienced traders know very well that the gold market is teeming with multibillion dollar hedge funds and professional speculators, which means they are after one thing… fast money!
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Granted, the popularity of investing in gold is also being fed by nations topping off their gold coffers, Forex traders shorting the U.S. Dollar, and even the possibility the U.S. Dollar will no longer be the world’s reserve currency. These are all highly valid reasons for gold to spike higher. But this far, this fast?
One has to remember that the story fueling the oil bubble (e.g. the BRIC emerging markets) was also a highly plausible argument, until the speculators dropped it like a bad habit. They even began shorting oil and the oil related equities they pumped up months before.
But still, the warning signs of an investment bubble are everywhere:
This is why that I continue to state that gold above the $1000 mark is a trade… not an investment!
As my Grandfather used to say: when everyone has jumped aboard the bandwagon, the wagon breaks down. (Apparently, that’s a fairly common adage considering Mark Haines says something similar in the CNBC segment.)