Gold Bubble

[Pskspray]

I have heard some experts say that Gold will be the next Bubble that bursts.

Right now the Dollar is weak and people are putting their investments in commodities like gold. But also, speculators are running crazy for all commodities thinking that inflation will run up and they will make alot o cash. Coffee, sugar, lumber, and of course oil, among many others are taking off. Yes demand has increased in emerging markets, but not overnight. Supply is tighter on some commodities but not to levels that would cause this type of increase.

Example coffee. Yes tighter supplies. Demand is up. Right now it's at a 14 year high. Last January coffee sold in the $1.30 per lb range, it's now at $2.30.

When the RV happens, and it will.... I believe commodities will start retreating. Gold will drop sharply while other agricultural commodities will decrease at a slower rate. They won't go back to recent year's lower levels.

Gold will tumble!! Fear will get alot of investors out of gold.

Don't really have a firm hold on what oil will do. I think with everyone being cash rich post RV, demand for oil will increase. I am certainly buying a gas hog or two. But production should increase also.

What do all of you think?

[shwngo]

I have been thinking the same thing about gold. It can't keep going up or stay up at the crazy rate that it is now. As much as i'd like to buy some i am scared for the reasons that you pointed out.

I think a lot of things will change post RV with our economy. There will be new business, more spending and jobs will be created as a side effect. it is not going to fix our problems but it will make them better, especially the jobs.

[Slaydadea]

Great thoughts! Rest assured, oil is not our future. Maybe in the interim but not the long haul. It's been almost 100 years since Rockefeller discovered "gas" was marketable? "Change" is coming in a big way. I'm sorry I'll miss it but hopefully you and yours will benefit.

[Charlie Echo]

I am a long-term bull on gold. But right now, I'm even more bullish on silver. I'll give you three reasons why ...

Reason #1: The Global Economy Is Shifting Into Higher Gear

According to the International Monetary Fund (IMF), the economic recovery in both developed and emerging markets is accelerating, with the stronger GDP growth decreasing or eliminating the output gap (unused production capacity) in emerging markets.

For 2011, the IMF is predicting 2.5% economic growth across the developed world, and a rate of 6.5% growth for emerging economies. Even here in the United States, which has experienced a lackluster recovery, manufacturing activity rose at the fastest pace in six years in January.

And employment increased by 187,000 last month, according to figures from ADP Employer Services. The median estimate in a Bloomberg survey called for a 140,000 gain last month.

Sure, the IMF is whining that this is not "the recovery we wanted." What a bunch of crybabies. They're like the kid who complains when you hand him the keys to a Chevy because it's not a Porsche.

So why is an economic recovery bullish for silver? Because silver is an industrial metal. Silver Insights figures about 75% of the 700 million ounces of silver mined every year is used up by industry and consumer goods like silverware. Only about 20% goes to jewelry. That leaves just 5% of mine supply for silver coins and investing, including silver ETFs.

Reason #2: Silver Outperforms Gold Long-Term

The simple historical fact is that in the big commodity bull market of the 1970s, gold rose 2,290%. That was good. Silver soared 3,751% — outstanding!

In the current precious metals bull market, which started in 2001, we've seen gold rally 422% through the close of 2010. Silver is up 565% at the same time.

If you believe we are facing the same kind of times we saw in the 1970s ... where debts due to an expensive war stoked the fires of inflation and commodity prices went through the roof, you might come to two conclusions. First, both gold and silver have a long way to go this time around. Second, even as gold goes up, silver is likely to go higher.

By the way, in this most recent 10-year bull market, we saw gold and silver climb 422% and 565% through the close of the year. During the same period, the S&P 500 LOST GROUND, dropping 4.74%. That's some food for thought.

Reason #3: Gold Is Underperforming Silver Right Now

January was a brutal month for both gold and silver. In fact, the SPDR Gold Shares (GLD) dropped 53.6 metric tonnes of gold in January. That was its second-biggest outflow ever. The iShares Silver Trust (SLV) saw an even larger decline in January of 495 tonnes — its biggest ever monthly decline in holdings.

Selling in precious metals is somewhat to be expected — nothing goes in a straight line, a correction is a normal and necessary part of any bull market, and nervous investors are banking gains.

But just last week, both silver and gold may have put in bottoms. That's how I'm playing it in my portfolios anyway — and while I may be a bit early, I'm playing the big trend.

However, since last week's potential bottom, silver has bounced hard. Gold is up ... but it's lagging.

Now, I don't like to focus on the short-term. I can't understand people who watch stocks or commodities minute-to-minute — there's too much noise, and an increased chance of manipulation.

But we know that silver fell harder than gold in the most recent correction. And we know that silver outperforms when they both go up. So that tells me that the biggest bargains are in silver right now.

This doesn't mean I dislike gold at all. Heck, I just got back from trudging around in the hills north of Veracruz, Mexico, where I checked out a promising gold project that's within sight of an ancient Aztec temple.

I recommended that miner to my Red-Hot Global Resources subscribers — and there are more incredible undiscovered companies in both gold and silver that are just waiting to be picked up.

by Sean Brodrick

[au-oilfutures]

Gold is still undergoing a correction (the strongest since 2008). About oil, very big discrepancy between U.S. (West Texas Intermediate) and global (Brent), which is +$100 at the moment. Technically lowest level before significant bidding would be around $1290, then after that, $1100, then in "everybody hates gold" scenario, around $1000. But held $1300 very well the past two weeks, so definitely a bid at current levels.

Commodities will continue to rise long-term until there is significant demand destruction. Doubt that an IQD RV would have much of an impact, and if anything, an RV would push commodity prices higher since the RV would mean a weaker USD, which is the normal stimulus for surging commodity prices.

Silver continues to outperform but the better PM to invest in is Platinum - far less supply and very important for the surging global auto industry. And REMs, via select companies (i.e., Molycorp) or thru the new ETF (REMX).

In any case, bullish commodities will continue to be the more profitable stance to maintain for the next 10 years.

[rjboots1]

I agree that we will probably see some short term pull back in all of these commodities mentioned. But the RV doesn't change world demographics. And the truth is that there simply isn't enough food being produced, or metals being pulled out of the ground, to satisfy the increasing demand for any of them. Global population is growing by an estimated 2 billion people over the next 35 years. And we already consumed more grain than we grew these last 2 years. We're one drought away from a global shortage in some specific items.

In addition, emerging middle classes (Asia), eat more meat. Livestock consumes 5X the grains that people do, which will add to the problem as time goes on. And China and India have a LOT of catching up to do in buying gold and silver to back a proportion of their fiat currencies equal to the US and the Brits.

So, though the RV is the short term "wild card", I just don't see these commodity prices going anywhere but UP for the next decade or more. And I don't think that the long term impact of the RV will be as significant as many are hoping, but that's all JMO.

[cjdavid]

Silver still will have a major correction to gold. There is a percentage that silver is usually "so much" behind gold and it is not even close at this time but it will have it's own RV as the world economy continues it's decline. We are all tied together money wise since WW2 so it's only going to take one country failing on loans before the snowball effects the entire world. We are on the edge here in the US! Fiat money has little real value. I plan on buying alot more phyiscal silver and some more gold along with some good realestate. While they may not always hold a consistent value,(what does these days) they will always have value. Heck when the world goes bust vegetable seeds will have more value than all the above.

The RV will only be a temporary fix for some. Many will go belly up after they blow through their RV dollars. so many saying they are going to retire. Keep working...just at your own pace. JMO