As these words are being, penned gold is consolidating at the $1,640 an ounce level after peaking at $1,900 on August of 2011. In addition, gold has fallen below both its 50 day and 200 day moving averages. There is no deficiency of economic commentators over the Wall Street pole that is prepared to write gold's obituary however is the bull market in gold definitely finished?
The most curious matter about all of this is the Wall Street consensus view. An opinion, which has not deviated for many years. The consensus view is that gold is a barbarous relic and therefore a bad investment. In the end that is what Keynes said and how can Keynes, be wrong. Then Wall Street was mugged by gold. For 12 successive years, gold out shined the S&P 500.
However, the story is far worse than that. In August of 1971 president Nixon took the US off the gold standard. During that time gold had been selling about $35.00 an ounce. In the 41 years since 1971, the buying price of gold has escalated 54.28 times to its all time high of 1900 as well as 46.85 times to its present high. During those times the Dow Jones industrials had been then marketing at about 890. The Dow peaked in October of 2007 in 14,164 for a rise of 15.91 times. Its current cost is 13,038 a rise of 14.64 times.
Wall Street needed a new story. The new scenario was that gold was at a bubble and so must not be purchased. Suddenly it had gone from being a barbarous relic that was a terrible purchase to being a bubble without ever being a buy.
One thing you have to learn about gold is its amazing rarity. The authoritative consensus is that right from the start of recorded history to the current between 150,000 metric tons and 165,000 metric tons is produced. At its most positive, that translates to about.76 troy ounces per human being. To put it differently if you gave each person in the world an extremely substantial gold ring you'd probably wipe out the earth's gold supply.
For an asset being in a bubble more is required than a historically big value. The key requirement is that the asset should be possessed by folks, speculators really who will be panicked into dropping the possession by falling rates making a death spiral.
The most curious matter about all of this is the Wall Street consensus view. An opinion, which has not deviated for many years. The consensus view is that gold is a barbarous relic and therefore a bad investment. In the end that is what Keynes said and how can Keynes, be wrong. Then Wall Street was mugged by gold. For 12 successive years, gold out shined the S&P 500.
However, the story is far worse than that. In August of 1971 president Nixon took the US off the gold standard. During that time gold had been selling about $35.00 an ounce. In the 41 years since 1971, the buying price of gold has escalated 54.28 times to its all time high of 1900 as well as 46.85 times to its present high. During those times the Dow Jones industrials had been then marketing at about 890. The Dow peaked in October of 2007 in 14,164 for a rise of 15.91 times. Its current cost is 13,038 a rise of 14.64 times.
Wall Street needed a new story. The new scenario was that gold was at a bubble and so must not be purchased. Suddenly it had gone from being a barbarous relic that was a terrible purchase to being a bubble without ever being a buy.
One thing you have to learn about gold is its amazing rarity. The authoritative consensus is that right from the start of recorded history to the current between 150,000 metric tons and 165,000 metric tons is produced. At its most positive, that translates to about.76 troy ounces per human being. To put it differently if you gave each person in the world an extremely substantial gold ring you'd probably wipe out the earth's gold supply.
For an asset being in a bubble more is required than a historically big value. The key requirement is that the asset should be possessed by folks, speculators really who will be panicked into dropping the possession by falling rates making a death spiral.
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