Comments on: Traders Know it’s a Gold Bubble, Why Don’t You?

By: Investing in Gold? Don't Forget About Women & Sheep! | Steadfast Finances

Thu, 17 Dec 2009 19:33:18 +0000

[...] the record, I fully believe that gold is in bubble territory and there are multiple reasons why you should think twice before rushing out and buying as many [...]

By: David F

David F — Mon, 30 Nov 2009 17:14:37 +0000

I probably jumped into this a little too late, but I think you're spot on with your analysis. I don't see the Fed messing with interest rates any time soon, and as long as other central banks are interested in stocking up on gold it will have some room to grow. $1,300 would probably be a good point to take some cash off the table. I also agree mining companies are a good way to capitalize on gold. .-= David F´s last blog ..Who wants to be a (virtual) millionaire? =-.

By: Doug Digger Eberhardt

Doug Digger Eberhardt — Mon, 30 Nov 2009 16:34:36 +0000

Wow…I guess I should have hit the “home” button and read your other post (this one) on gold Matt.

I’ve missed all the fun!

First, Najarian is a perennial gold naysayer. I have videos (trying to figure out how to get from DVR to computer) that I’m trying to put up on my site exposing his continued negative bashing of gold as well as Melissa Lee and other of the CNBC folks.

At the same time, Narjarian has been right about FCX and copper. But copper is not known the world over as money. FCX also got clobbered like every other commodity stock (including gold mining stocks) last year.

Yet interestingly enough, gold ended the year up for the 8th straight year and will do so again this year.

The short term I addressed in post #30 of your October 9th article “10 Reasons Why Investing In Gold Is A Bad Idea”

http://steadfastfinances.com/blog/2009/10/09/10-reasons-why-investing-in-gold-is-a-bad-idea/

(which should be under your “related posts” no?)

As I said there, the U.S. Dollar index is still the key. Until that March 2008 low is broken, the dollar could bounce and thus gold fall. I hope it does. Then I expect to hear more of the gold naysayers claim victory….that is until the dollar index finally breaks through 72 and gold is well north of where it is now.

Holders of physical gold care not that gold goes to $800 on its way to $2,000 and higher.

Traders should be cautious. I’ll agree with that as you know.

By: What is the Fear Trade? | Steadfast Finances

What is the Fear Trade? | Steadfast Finances — Thu, 26 Nov 2009 19:05:36 +0000

[...] However, the one underlying characteristic of the fear trade is this: everyone will eventually want a piece of the (trading) action because fear, as well as greed, is continually pushing the market to buy or sell more of the stock as it gains momentum. This “mad” rush to buy can create such a psychological shift in the investment community that it can artificially create an investment bubble (e.g. gold bubble). [...]

By: Best Reads of the Week: Gold Bubbles, TBTF Banks, & PR Improvements | Steadfast Finances

Sun, 22 Nov 2009 20:42:05 +0000

[...] bubble has formed, then it’s time to hold on for a wild ride. Which is why I keep saying that traders know it’s a bubble, and that gold is a trade, not an investment above $1000 per [...]

By: Confirmation Bias: Search for Information that You Don't Want to Hear | Steadfast Finances

Tue, 17 Nov 2009 04:40:41 +0000

[...] on the stock market, do you only read articles with catchy titles that supports your thesis? (Gold bugs vs. gold [...]

By: Matt SF

Matt SF — Tue, 17 Nov 2009 01:08:31 +0000

Not hardly.

By: Andrew Bachagalupe

Andrew Bachagalupe — Tue, 17 Nov 2009 01:00:35 +0000

http://www.theage.com.au/business/end-of-trend-is-nigh-for-central-bank-sales-of-gold-20091116-iidb.html

nuff said…..

By: Gold Surges to Another High - Money & Investing - Banks.com

Gold Surges to Another High - Money & Investing - Banks.com — Mon, 16 Nov 2009 16:26:13 +0000

[...] a good idea to go for gold right now? There are some that believe that all this gold craziness is a bubble, and that it can’t go much higher. Even if it does, the argument goes, gold will have to [...]

By: Matt SF

Matt SF — Mon, 16 Nov 2009 16:08:08 +0000

@ Chad

Nice work on picking up gold when it was at $270. That’s how the pros pick up value investments, as well as properly diversify a portfolio.

I’m not well versed in the Forex market, so I don’t think it’s wise for me to comment about money being created versus destroyed. However, I am smart enough to follow along with folks I trust, so most of my projections revolve around Warren Buffett’s statement that the dollar will be worth significantly less than it is now when you look 10 to 20 years out.

Like you, that doesn’t mean I’m going to fall victim to the “value trap” or “value hype” that surrounds gold at these levels.

As I’m looking at gold hitting another (non inflation adjusted) all time high today, I’m just curious what price gold must hit to be roughly equivalent to the projected value of the US Dollar in 2019.

By: Johnny H

Johnny H — Mon, 16 Nov 2009 15:43:56 +0000

@Chad
Money is being destroyed, but I don’t think anyone can argue it isn’t being created as well.

Actually has done quite well in deflationary environments…

Besides there are many more variables in play than simple inflation vs. deflation. For example, instability, war, debt, unemployment.

I do think gold will pull back, perhaps even to 800, very soon. But I would be very surprised if we didn’t see well over 1500 within the next few years.

If the US goes “back to normal” gold will soar and the dollar will get trashed even more.

By: Matt SF

Matt SF — Mon, 16 Nov 2009 15:42:44 +0000

@ Andrew

Thanks man. I love to do the fundamental analysis and predict what consumers/investors will want to buy in the future, but all that stuff is just one part of the buying process. Nothing beats pulling the long term chart and identifying if you’re about to invest when the stock price is above or below the long term historical trend line. In gold’s case, it’s way above this trendline but not nearly as severe (yet) as the real estate bubble graphic from the NY Times. That’s just insane!

Plus, it’s just really cool to graphically show the similarities between all those bubbles. What goes up, must come down.

By: Chad

Chad — Mon, 16 Nov 2009 15:18:57 +0000

I firmly believe gold is in a bubble formation that is currently being formed. I have traded gold professionally since 1999 and was purchasing my bullion at $272 an ounce when it was truly a great value. It amazes me how many people, even so-called educated individuals think gold is still a good value. Are you kidding me? I have seen this over and over again in my trading career. The herd is meant to believe something that is not true. Threat of inflation? No way, quite the opposite is true. Money is being destroyed not inflated. We will not see significant levels of inflation for years. Amazing how easy it is to fool the masses into believing something that is not true. The Wall street spin doctors are masters at doing that. Gold will initially fall early next year to around the $800 level, find some support at that level and consolidate and then go lower as the world finally realizes that we face continued unemployment and deflation and further contraction of the consumer. Anyone long gold or assets that normally do well in an inflationary environment will learn a costly lesson. This has happened before. Funny how things continue to be the same.

By: The Financial Blogger » Blog Archive » Festival of Stocks: My Thoughts on Investment Products

Mon, 16 Nov 2009 09:57:45 +0000

[...] presents Traders Know it?s a Gold Bubble, Why Don?t You? posted at Steadfast [...]

By: Matt SF

Matt SF — Sun, 15 Nov 2009 16:55:57 +0000

Good point, but I’d bet TJ’s wisdom would also be sounding the shenanigans horn when he saw the rapid valuation change in gold.

Hence the other famous quote… banking establishments are more dangerous than standing armies.

Moreover, their dangers are compounded when the bankers that run them also find themselves as governmental regulators.