ConcernedLemming asked: And what do you think is driving it? Are economists ever able to agree on the cause of a bubble (and what ultimately pops it) after the fact? especially with precious metals?
Elian Gonzalez answered: It is not a bubble; it is the real deal. Governments worldwide have become like children with a new toy, the printing Press. Hey have given away the store with social services that are killing them. The USA is bankrupt, our dollar is worth about.60/.70 cents today. Check out the gasoline and food prices to appreciate the irony. Gold on Friday hit $1810/oz , the gold gurus are predicting $2000+ gold by end 2022 because our government and the rest of them have no solutions. Governments cannot print more gold which will continue to make it a store of real value. I have been buying gold by the gram ($47) which makes it affordable for most people.
Gold IS going up in value. It has been up every year for the last ten years. Silver has recently surged as well. Both are the result of the US Government’s $1.4 Trillion annual deficits, adding to the current $14 Trillion national debt, and the FED’s monetizing of the Debt (under the guise of “Quantitative Easing”). Silver is starting to look like a bubble to me because it has risen so far in a relatively short period of time that I think it may be getting ahead of itself. Gold, however, is not a bubble so long as the US Government continues its huge deficits and keeps devaluing the currency by printing money. As long as these events continue, they will support Gold’s rise, and I don’t see a serious effort by politicians in either party to get the deficit under control. To do so will require huge cuts in entitlement programs (Medicare, Medicaid and Social Security), which are sacred cows in Washington.
Another way of looking at it is that gold is NOT going up, but the dollar is dropping in value which makes it look like Gold is going up. You need to look at gold in all the various currencies.
But, I do think gold will start coming back down once Bernanke starts lifting the Fed Funds rates. This will bring back demand for the dollar. But for now, the lower value of the dollar is helping U.S. companies succeed abroad. But this comes at the risk of inflation. Many analysts expect Bernanke to start raising the Fed Funds rate at the end of this year. We’ll see what happens.
It will last as long as there is turmoil in the middle east and the US dollar is going down.
If people in the middle east don’t have a currency gold and silver are the only thing stable in their life. Gold and silver become their currency.
The US dollar is a ‘reserve’ currency that the world depends on in times of turmoil. Our dollar is plummeting due to our economic turmoil. When we start to get our financial house in order our dollar will head up again. The only thing holding value here is gold, silver and oil. Oil is valued in dollars.
Now I basically invest abroad, mining stocks and commodity ETFs. (Canada, Australia and Switzerland are my favorites, they are tied to gold & natural resources.