0
0

Bubble Bubble Everywhere


 invite response                
2006 May 4, 2:38pm   36,190 views  364 comments

by astrid   ➕follow (0)   💰tip   ignore  

Gimme some of that bubble, boy!

Gold is now at $675/oz and silver at $13.88/oz. Do you think their prices will go up, down, or sideways (into government intervention)? Do you think there IS a bubble in gold? Do you think there WILL be a bubble in gold?

Also, please share your thoughts about any other bubble you see on the horizon.

This is a troll and postmodernism free zone. Trolls and postmodernists will be posting at their own peril. Haikus will be most welcomed.

PS - all comments posted here should not be considered investment advice. Always do your own research before making investment decisions.

#bubbles

Comments 1 - 40 of 364       Last »     Search these comments

1   OO   2006 May 4, 2:46pm  

I like seeing the word gold and bubble together. If nobody questions it any more, then I will start to get worried. The more the mainstream press and mags poo poo it, the better.

2   OO   2006 May 4, 2:53pm  

I will say, it depends. If Volcker is in charge this time around, I expect it top off at around $1000.

Very fortunately we have Bernanke around this time. Sky is the limit.

3   surfer-x   2006 May 4, 2:53pm  

What the fuck chuck, suck
I thought there would be more bucks
Now I suck, I suck

4   astrid   2006 May 4, 2:57pm  

surfer-x,

Huh?

Oh, a haiku.

Duh!

5   OO   2006 May 4, 3:05pm  

I am reading that by 2018 the Medicare fund will be depleted. What exactly does it mean? The Medicare fund will be $0 in value if we are continuing the current usage?

Does it mean by 2018, if nothing is to be done, then the 65+ age group will need to pay for their own medical cost a dollar for a dollar?

6   astrid   2006 May 4, 3:09pm  

HARM,

Is there any way to resize the picture? The original image is much bigger than what's shown up.

7   LILLL   2006 May 4, 3:10pm  

Why do I think gold will go down?
No logical reason whatsoever.
I just think it will.
I would be very suprised if it went up to $1000.
And disappointed that I didn't invest.
I just think the money will go elsewhere....
and more conservatively so...
I'm thinking Euros...

8   astrid   2006 May 4, 3:13pm  

Owneroccupier,

Do you have the source re: Medicare?

t-Bone,

Nice article. I hope the bubble burst destroys these fools. Everyone repeat after me: a house is not an investment!

10   HARM   2006 May 4, 3:18pm  

HARM,

Is there any way to resize the picture? The original image is much bigger than what’s shown up.

Yes, just add "width="xx%" before the ending "/>" of the img src tag.

I do not receommend setting ANY picture greater than 100% because it sends all the right-hand links to the bottom of the page and skews the posts as well, making them hard to read.

11   OO   2006 May 4, 3:23pm  

Linda,

nobody knows for sure what will happen in the future.

Those who invest in gold/silver are counting on Bernanke to print money like mad to save the US economy. The more money he prints, the higher gold will go, but it doesn't mean much, gold is just retaining its purchasing power as opposed to USD yet. So in the end gold may be worth $2500 USD, but the things you can buy with an ounce is probably the same, it is another form of USD devaluation.

Maybe Bernanke turns out to do the "right" thing and push the US into deflation, a harder route to take. But I highly doubt his resolve and the resolve of the current admin. That's why I bet on gold price going much higher than $1,000.

12   Peter P   2006 May 4, 3:26pm  

Very fortunately we have Bernanke around this time. Sky is the limit.

That is my impression. Beware of retracements though.

13   astrid   2006 May 4, 3:27pm  

Owneroccupier,

As you've noted, "in the end" gold will simply inflate with money, but the initial rate of inflation will be for gold will be high, so there's a window of opportunity to buy gold and then dump it for another asset class at a relative bargain compared to gold prices.

14   OO   2006 May 4, 3:28pm  

So does that mean when we retire, we will have no Medicare at all? Should I go get a Canadian citizenship now as a backup option? :-)

15   LILLL   2006 May 4, 3:32pm  

OO
You could very well be right about gold. There are certainly theories of the presses running 24/7 with no M3.
Isn't the Fed's main job to keep the USD strong, along with low unemployment,and controlled inflation? Do you think they got rid of M3 reporting because they intended to print endlessly?
So they could blatantly reduce the debt w/o saving the USD?
I don't have much faith in this administration but would they really do that?

16   LILLL   2006 May 4, 3:33pm  

Peter P.
Beware of retracements though.

What do you mean?

17   Peter P   2006 May 4, 3:38pm  

What do you mean?

Prices may retrench significantly before heading up again.

NOT INVESTMENT ADVICE

18   OO   2006 May 4, 3:39pm  

Linda,

I believe the Fed was set up to "fight inflation". Keeping USD strong is one of the ways to do it. But when Fed came into being, we didn't have a huge national debt, no medicare or SS shortfall, and we were still the manufacturing powerhouse of the world. When I was a kid (in the 70s), I had some milk cans dating back to the 50s (I think it is Kilm) passed down from grandparents with which I stored my toys, and the cans were so sturdy and well built that whenever my parents saw them, they kept saying, "see, made in America means superior quality." I am not sure if such an image still exists today.

So in a way, it is not all the fault of this admin. We happen to have a very corrupted and incompetent BushCo at the tail end of a long unsustainable path. If we had a more competent admin, these problems would still stare at us in the face, but at least we could prolonge it or dig a bit out of the hole instead of digging deeper.

I think "strategically" devaluing USD is exactly what this admin has in mind as an easy way out.

19   Peter P   2006 May 4, 3:40pm  

Isn’t the Fed’s main job to keep the USD strong, along with low unemployment,and controlled inflation?

* The mission of the Fed is to create a utopia
* Utopia does not exist

Conclusion: the Fed will fail

20   GallopingCheetah   2006 May 4, 3:43pm  

Dream on, baby.

During his testimony at the congress, Bernanke raised serious concerns about inflation. Unfortunately, his words were misinterpreted (and later corrected) by the press. He's going to keep raising the rates and bust gold.

21   astrid   2006 May 4, 3:45pm  

Owneroccupier,

Finally, you see the light! I've been saying this for a while now. The worst part is that Americans are on average a very unhealthy bunch, so I anticipate them getting ill early into retirement, further exacerbating the medicare cost problems.

22   OO   2006 May 4, 3:45pm  

That is fine, I am waiting for his action. Action speaks louder than words. I am ready to jump back into USD whenever I see concrete actions.

Bernanke needs to choose between high inflation and high unemployment. It will be an interesting choice.

23   astrid   2006 May 4, 3:46pm  

"misinterpreted (and later corrected) by the press"

I wouldn't put too much stock in the words of Maria B.

24   GallopingCheetah   2006 May 4, 3:47pm  

Me, too. I believe the latter choice of "high" is more likely.

25   GallopingCheetah   2006 May 4, 3:48pm  

No, it has nothing to do with M.B. (or B.M.W.).

If you go over the transcript of his testimony, you'll see that the initial press reports were off the mark.

26   astrid   2006 May 4, 3:48pm  

GC,

Yeah yeah, your all encompassing theory about the ruling class screwing everybody else...I get it.

27   GallopingCheetah   2006 May 4, 3:49pm  

I gave up.

28   tsusiat   2006 May 4, 3:51pm  

Destruction of the US dollar will have grave impacts on a lot of other currencies of nations running trade surpluses with the US but lacking local markets capable of picking up the slack. That's why the economic house of cards keeps having more cards stacked on it by all the players.

Think Asia, Mexico etc.

Owner Occupier is right, it doesn't mean anything if the US dollar is dropping against gold - the valuation of gold itself may remain constant to some degree against other currencies or in pure purchasing power.

Don't think what happened with peso devaluation etc can happen in the US? Think again:

If all oil producing countries switch to Euro the rest of the world would dump the Dollar causing it to drastically lose its value. To understand the seriousness of this let us look at China alone. China has an excess of $800 billion in its foreign exchange reserves and may increase to $1 trillion soon. China buys most of its oil from Saudi Arabia and trade between the two countries has exceeded $14 billion in late 2005. In 2006 China also entered into government-to-government deals with Saudi Arabia. Iran is also a major supplier. If China alone dumps the Dollar the American economy would suffer greatly. Now imagine what would happen if other countries, such as Japan, India, Pakistan, and Saudi Arabia and all the Organization of Islamic Conference (OIC) countries, would also dump the Dollar.

source: http://www.americandaily.com/article/12589

This same line of reasoning is widely reported elsewhere, just google "destruction of the US dollar".

US and Canadian dollars will be at par in the next two years - that's not just an appreciation of the Canadian dollar, it's a devaluation of the US buck. this is a stunning turn of events from the $.63 Canadian dollar of 3 years ago.

And even though the Saudis etc are going to make a pile on those last barrels of oil they squeeze out of the sands in the next 20 years, when the oils gone, where will those final petrodollars flow?

I think gold is a good bet to go higher.

People are going to laugh at the present California housing prices in 20 years the same way people make fun of dutch tulip crazes.

Severe economic shocks are coming, look out below.

29   astrid   2006 May 4, 3:54pm  

tsusiat,

"US and Canadian dollars will be at par in the next two years - that’s not just an appreciation of the Canadian dollar, it’s a devaluation of the US buck. this is a stunning turn of events from the $.63 Canadian dollar of 3 years ago."

Don't I know it! Lee Valley is becoming quite expensive for me.

30   GallopingCheetah   2006 May 4, 3:55pm  

Canadian may go as high as 1.2 USD, my gut feeling tells me.

31   OO   2006 May 4, 3:58pm  

Forget about what he says. Because he can only say things he is allowed to say.

It boils down to what choices one has. US is extremely leveraged as a nation. You have to raise interest to at least above 8% (the true neutral rate) to stop gold's ascend, but that will send lots of people, and consequently US consumer economy into recession. Or, he can sit back and let USD tank, and inflation run wild a bit. The better part of it is, Fed is, or has lost control of how things can unfold. We are giving Bernanke too much credit, most of USD are not sitting in America, they are hoarded by the Arabs, Chinese, Japanese, Koreans, all countries that have a trade surplus with us. What they do with USD not only depends on economic benefits, but also how much they like us. Human emotions is definitely a part of international politics.

In the end, if he is not afraid of high unemployment which may cause social instability amongst all this illegal immigration backlashes, outsourcing fears, etc. Kudos to him. We will see.

32   GallopingCheetah   2006 May 4, 3:59pm  

O.O., how did you get this 8% number?

33   OO   2006 May 4, 4:00pm  

go to shadow government statistics site.

I don't trust official CPI any more, we all know it is cooked.

34   OO   2006 May 4, 4:02pm  

tsusiat,

do you have historical CAD exchange rate dating back further than the 1990? Thanks.

35   GallopingCheetah   2006 May 4, 4:04pm  

I know CPI is cooked. But 8% sounds too high to me. I believe 5-6% is a more reasonable number.

I understand that many have complained about the government fudging of statistics. But, conspiracy theories are just conspiracy theories. Someone raised a good point: Most beauracrats at BLS were appointed during the Clinton Adminstration; they don't have a strong incentive to help the Bush & Co, especially by doing so they would expose themselves to future prosecution.

36   LILLL   2006 May 4, 4:04pm  

OO & Tsusiat
I still think CDs in euros are a stong, conservative approach for my HAHAs. If oil moves to euros, they will rise against the USD.
Now I've never looked deeply into these markets. Perhaps theres something I missing in my thinking.
Since I sold my house, I don't want to gamble with my cash...but I don't want it devalued over the next few years either. At some point I will invest in real estate again....for that is where my interest lies. Until then...euros?
I've put a call into Everbank.

37   GallopingCheetah   2006 May 4, 4:06pm  

SQT, I emphatically agree. I expect to make money from speculation in these bubbles, on both the long and the short sides, for now I suddenly found a few good causes to make money.

38   OO   2006 May 4, 4:06pm  

GC,

all we are saying is just personal assessment. We can check back in a few months or a few years to see how right or wrong we are, and why. I'd like to do that.

39   GallopingCheetah   2006 May 4, 4:07pm  

O.O., that is fair.

40   OO   2006 May 4, 4:09pm  

Linda,

do whatever you feel comfortable, after all, you need to sleep tight at night, that is what counts.

Comments 1 - 40 of 364       Last »     Search these comments

Please register to comment:

api   best comments   contact   latest images   memes   one year ago   random   suggestions