the Gold Bubble

“Early this month, Hu Xiaolian, a vice-governor of the People’s Bank of China, was asked if the central bank would be replacing more of its greenbacks with gold after a gold purchase earlier this year. He said that was unlikely given that the bank now worries about the emergence of a gold bubble.” …”Central banks and the International Monetary Fund can and do regularly sell off gold from their reserves, flooding the market. Gold producers bring uneconomic mines back into production when a rise in gold prices makes them viable again…. And gold, unlike oil, does not change its chemical composition, and turn into something else, when used. ” via thestar.com

I’ve been saying this for a while, but no one online would listen. there are better investments then gold when an economy collapses. The price is inflated. Do yourself a favor and sell your gold now. My family makes their money off of Exxon Mobile. Petroleum is where your money should go and new green technology will increases it’s value, not decrease it.

“Gold hit its record, inflation-adjusted peak at $850 in January 1980. That too was a time of high anxiety, caused then by double-digit inflation and interest rates; huge public- and private-sector debt; and geopolitical uncertainty after the two “oil shocks” of the 1970s. In the short space of a decade, the price of oil – a much bigger part of the Western economy than it is today – had skyrocketed from about $2 per barrel to $34. But then the U.S. Federal Reserve Board finally broke the back of inflation. Economic growth boomed in the 1980s, and the stock market entered its greatest bull market in history. And gold went into a 19-year free fall, plummeting to a nadir of $252.90 in June 1999.”

To bet on gold, especially if one were to buy it at today’s nosebleed prices, one must believe that the U.S. dollar will collapse in value and be replaced as the global reserve currency. You have to assume inflation will return to double digits as governments cope with admittedly massive debts they’ve taken on in combating the recession with their stimulus spending.

You have to believe some indebted nations, even the U.S., will default. And that, like the sovereign wealth fund (SWF) of Dubai a few weeks ago, all the world’s SWFs will become insolvent, including those of Norway, Alaska and Alberta. You might believe, as some goldbugs do, that a medieval barter system is in our future.

via thestar.com

After the precious metal had set 19 records since Nov. 1, Friday’s tumble was at least temporary confirmation of the growing bearish view. News that job losses were far better than expected pushed gold down 4%, the biggest percentage decline in more than a year.

For many former gold bulls, evidence has been mounting that the rally was weakening. They point to slackening demand for the actual metal combined with a surge in buying gold futures—an often highly leveraged bet that prices will keep rising. They say that at current prices, gold is trading …

via online.wsj.com

“Practically every bit of gold in use since the Pharaohs remains in existence. It is a notoriously “soft” metal useful in few industrial applications. For many precious-metals buyers, it is eclipsed in “aspirational” value by platinum.”

“Nouriel Roubini, economics professor at New York University and one of the few experts to warn about the epic U.S. housing bubble and its consequences when there was still time for central bankers to safely deflate it, this month warns about “the new bubble in the barbarous relic that is gold.” Reminding clients of his financial advisory service that gold “has no intrinsic value,” Roubini finds no fundamental justification for gold’s rise “with no near-term risk of inflation or depression.”"
via thestar.com