For the Last Time, Is Gold in a Bubble?
While a few mainstream outlets…acknowledge gold’s stellar run, most remain skeptical or outright bearish and the blasphemy they purport is that gold is in a bubble. Let’s settle it, right now, and shut these naysayers up. What bubble? Words: 670
So says Jeff Clark (www.caseyresearch.com) in an article* which Lorimer Wilson, editor of www.munKNEE.com, has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.) Clark goes on to say:
Current Gold Bull Market Does Not Compare with That of the 1970s
The Nasdaq advanced over 1,900% during its bull run gaining 182% in the final year of its peak. Gold returned 10 (and as much as 14) times [one’s] money in the 1970s bull market and surged 80% in four weeks during the blow-off top of January 1980 yet our current gold price is up [only] 400% when measured on a daily basis, not monthly as in the chart. None of this is happening to our current gold price. [This would suggest]… to doubters [that] we have got a long way to go before we start legitimately using the “bubble” word.
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Central Banks Continuing to Buy Gold
Furthermore, the skeptics…need to catch up on world affairs. The World Gold Council (WGC) reports that Russia, Venezuela, the Philippines, and Kazakhstan [have already] bought gold in this first quarter of 2011 while [other] central bank sales remain depressed…China, the world’s largest gold producer, already buys all the gold produced within its country [and] the WGC forecast that overall gold consumption in China could double in the coming decade, a demand that production certainly won’t be able to match.
Gold as a Safe Haven is Growing
A Iran/Israel showdown appears closer almost every week. As further evidence that each side is preparing for conflict, Saudi Arabia recently agreed to permit Israel to use a narrow corridor of its airspace to shorten the distance for a bombing run on Iran – all done with the agreement of the U.S government. Simultaneously, the UN Security Council imposed a new round of sanctions on Tehran. Nobody appears to be backing down.
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Gold Continues to Escalate Even Without Inflation
The current run in gold is with no inflation. Core CPI has fallen to the lowest level since the mid-1960s – but what happens when inflation does set in and what if it is as bad [as] or worse [than] the 14% rate we got in the ‘70s? Sure, deflation is the immediate concern, but with a U.S. federal debt of $13 trillion, unfunded future liabilities exceeding $50 trillion, and a current budget deficit of over 10% of GDP, a massive debasement of the dollar is virtually ensured, triggering an onslaught of inflation. It’s coming.
With all these concerns, these guys don’t want to own gold? Bubble, schmubble! Stocks are vulnerable, bonds are toast, currencies are fiat. Other than cash, where are you going to put money right now?
Gold could correct, of course, and I frankly hope it does [because] if it does I’ll be buying while the bubble-heads are smirking. [It is just a matter of time, however, before] we will be reversing roles. [Got gold?]
*http://www.caseyresearch.com/editorial/3479?ppref=GLD178ED0610D (Jeff Clark is the editor of BIG GOLD, Casey Research’s monthly advisory on gold, silver, and large-cap precious metals stocks.)
- The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
- Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.
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