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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
 Posted - 11/17/2009 : 16:59:57
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How to tell if gold is in a bubble (which it isn't at this time.)
I showed folks how to perform the ultimate test of whether an asset is "too popular" or "in a bubble."
Here it is:
Ask 100 people on the street if they own gold.
See what they say.
Don't ask folks who read newsletter writers like Doug Casey or Porter Stansberry.
Don't ask folks who you regularly talk investments with.
Ask randomly chosen members of the public if they know why gold is "real money".
Why gold has climbed from $650 to $1,100 in the last three years.
I guarantee you the average person on the street is going to look at you like you asked him which airline offers nonstop flights to Venus.
....When a bull market gets too popular,
it looks like tech stocks did back in 1999.
This was when everybody and his brother bragged at the office Christmas party about making a fortune in Cisco or Microsoft.
It was when schoolteachers, personal trainers, and cab drivers suddenly became tech stock experts.
Folks knew what "bandwidth," "routers," and "e-commerce" meant.
Only when an asset enjoys that sort of widespread attention can you say it's too popular.
I can't say that about gold right now...not after talking with friends who do not invest...not after talking with the people sitting next to me on the plane. The public still has no idea what "bullion" really is...or how the government's reckless "tax and spend" behavior is clobbering our currency.
Don't believe me? Just ask 'em.
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Gold Bubble? not likely...
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