What will pop the gold bubble?

[Damuri_Ajashi]

@TriPolar

Well you’re right, it is, now that I look at what I wrote. It would require a lot more qualifications. First of all it’s primarily non-consumable. It’s supply is very limited relative to demand, and that supply grows very slowly. It does have a unique cultural significance, and a wide variety of industrial applications that are difficult to replace with a single substance. But basically what I’m getting at is that is a very old non-consumable commodity with very stable market properties, exhibiting broad demand worldwide for varying reasons.

I say this because the price of gold, though unreasonably high in my opinion, should still be greater than would be expected for a commodity that had only industrial value or cultural value, or did not have the known supply characteristics, market stability, or broad based demand.

The commodity traders I know say its a bubble mased on mythology. They have made a LOT fo money on the rise in the price of gold and they anticipate making even more money on its decline because so much gold has found its way into the hands of amateur gold investor that provide a ready patsy for the eventual collapse of the price of gold.

[TriPolar]

@Damuri_Ajashi

The commodity traders I know say its a bubble mased on mythology. They have made a LOT fo money on the rise in the price of gold and they anticipate making even more money on its decline because so much gold has found its way into the hands of amateur gold investor that provide a ready patsy for the eventual collapse of the price of gold.

That certainly sounds like the situation. As I said, the price is inflated, but the value of gold in not nothing either. And if commodity traders don’t make money as the price goes up and down, they won’t be in business for very long. That’s their job. Someone told me long ago, “If it matters to you whether the price goes up or down, you are in the wrong business”.