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Old 05-25-2012, 07:55 AM   #1
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Gold/Silver is a bubble

Hello all!

I have had several interesting conversations about metals with random people in the past month concerning metals. It seems the average persons view of metals is it is a bubble. The view is metals, especially gold, are a bubble and will crash in price soon

First what is a buuble? Here is an excellent, albiet wiki, article on economic bubbles: http://en.wikipedia.org/wiki/Economic_bubble

The biggest reason, in my opinion, for bubbles is the herd mentality. For there to be a bubble in the metals, you would need a large majority of the population hyped up about them. How many people do you meet think metals are a good purchase? Personally, I have had a lot more people ask me about the Facebook IPO. Amusing article where a guy tried to sell an ASE for 5-10 dollars on the street:

http://www.sovereignman.com/finance/...ecious-metals/
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Old 05-25-2012, 08:11 AM   #2
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There is a guy in California - Mark Dice - who periodically posts YouTube videos where he goes around trying to sell gold coins or use them to buy things which are pretty funny:

From 2009:

From 2011:
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Old 05-25-2012, 08:56 AM   #3
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I think that the average person sees PMs as a bubble because a majority of people don't really have a good sense of how little their FRNs are really worth, and how quickly that worth is changing on the downside.

Some of it is a bit of a bubble, but we usually see those shake out within a few months of each other. That comes with everything that is traded: PM, paper, real goods, etc.

Just my 2 cents.

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Old 05-25-2012, 08:58 AM   #4
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Originally Posted by ADK View Post:
I think that the average person sees PMs as a bubble because a majority of people don't really have a good sense of how little their FRNs are really worth, and how quickly that worth is changing on the downside.

Some of it is a bit of a bubble, but we usually see those shake out within a few months of each other. That comes with everything that is traded: PM, paper, real goods, etc.

Just my 2 cents.

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It is amusing to see the shock in people's eye when you tell them a hundred years ago 20 USD was one ounce of gold and 1 USD was one ounce of silver!
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Old 05-25-2012, 09:49 AM   #5
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The lack of public participation in the gold sector is to the point of idiocy.
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Old 05-25-2012, 09:51 AM   #6
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Interesting article on the phychology of the market:

http://www.silverdoctors.com/psychol...metals-market/
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Old 05-25-2012, 09:56 AM   #7
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....of course it is not a bubble, everybody and his dog (I've learned that new saying in English, and I love it ) HATES PMs, try to talk to anybody investing about differentiating into gold/silver, and watch their faces melting into mixture of amusement/freaked-out and "whaaaaaa???" state.

We are constantly HAMMERED with news that even in NORMAL situation (let alone "bubble") should be extremely bullish for PMs, yet apart from great volatility in gold price, PMs are going nowhere, short-mid term.

Quite unlike any of the other bubbles I can think of. If anything, it is currently in a "negative" bubble - everybody hates it. As usual with sheeple - they make round eyes, and do not analyse things on their own. then they woke up, when the game is long up, and all the smart guys are already cashed out.
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Old 05-30-2012, 07:40 AM   #8
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Haha... Mark Dice just posted a new video where he tried to sell a 1ozt Maple for $25 in front of a coin shop:

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Old 05-30-2012, 08:12 AM   #9
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I do not talk about PMs in public, period. It's just asking for trouble.

One day, the people of the western world will be forced to open their eyes, and then there will be trouble.
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Old 05-30-2012, 08:33 AM   #10
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Originally Posted by PMBug View Post:
Haha... Mark Dice just posted a new video where he tried to sell a 1ozt Maple for $25 in front of a coin shop:
That was hilarious! "Bubble" my bottom Geez, where this guy lives, I might hang around corners, and make one sweet deal, if I am lucky
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Old 05-30-2012, 05:09 PM   #11
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I had some good laughs today showing these to a couple guys who are helping me do infrastructure improvements (which is why I'm not logged on as much these days). Note: Most didn't graduate high school. Not one didn't know what a gold coin was worth. Maybe stupid city folk just suspected a fake (and didn't know how to tell), but these guys would have hopped right on that instantly.

I have a perhaps different definition of bubble than most, but try this on:
No leverage in use, no bubble - it's gotta be levered to provide the "pop" of that bubble when it happens.

Every pro is "all in".

Retail is starting to get really excited, and they are going all in (faceplant? Started right off as a bubble with idiots opening etrade accounts just to put all their and their family's money into it, ouch).

When the taxi drivers, barbers, shoeshine boys are talking, it's time to get out.

Virtually all bubbles show a price curve concave up - like APPL recently did when we made some money shorting them. Not all bubbles pop all at once, there are always some bargain hunter bumps going down (look back at the crash - a lot of that crap should have hit the floor by the second day, but no...took awhile to sink in that it was truly worthless, and the crash wasn't a short term glitch).

All psychology, in other words. But to me, there's no bubble without leverage, else you just don't get that extreme selling pressure off the very top when it's time for it to blow out and pop. You almost require that initial sudden and steep drop to make the thing really crash - it creates the necessary fear in those who would otherwise "hold, this is only a glitch".
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Old 07-05-2012, 07:33 AM   #12
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http://www.silverdoctors.com/u-s-gol...-quarter-2012/

If gold is a bubble, why is the U.S. exporting gold as fast as it can? Net of imports, the U.S. exported over 100 tonnes of gold in the first three months of 2012!

"Of the total 178 metric tonnes of gold exported from the U.S. during Q1 of 2012, Hong Kong, the United Kingdom and Switzerland acquired 161.7 metric tonnes or 91% of the total amount. If the rumors are correct, the majority of this gold is being shipped to these countries and being purchased by the Big Eastern Buyers."

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Old 07-05-2012, 08:51 AM   #13
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... who are purportedly melting and re-casting the metal ...
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Old 10-02-2012, 01:14 PM   #14
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http://www.silverdoctors.com/cnbc-ho...larity-ensues/

"With a bullion bankster from RBS as the ‘guest host’, the latest CNBC Commodities Corner attempted to claim gold is ‘in a bubble’ with the metal nearing $1800 again, claiming ‘nobody actually needs gold‘ and that those wishing to allocate a portion of their funds to gold should utilize an ETF.

Unfortunately for CNBC, the producers didn’t do their homework on their guest, Managing Director & CIO at Swiss Asia Capital, Juerg Kiener."

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Old 10-03-2012, 02:52 AM   #15
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Old 10-03-2012, 05:11 AM   #16
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Nice one. I love especially that quote :

"I've never seen a bubble in my life, where investors are allocated (on average) less than 1% in"

Well, I might not be able to put it all together as nicely as the gentleman did, but I must agree, my thoughts exactly

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Old 10-03-2012, 06:02 AM   #17
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bwahaha.. CNBC = Propaganda financial news.
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Old 10-03-2012, 01:37 PM   #18
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Originally Posted by bushi View Post:
Nice one. I love especially that quote :

"I've never seen a bubble in my life, where investors are allocated (on average) less than 1% in"

Well, I might not be able to put it all together as nicely as the gentleman did, but I must agree, my thoughts exactly
That's basically what I was saying.. There is no public participation.
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Old 10-03-2012, 02:54 PM   #19
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When everyone you know has gold and is trying to get more gold, then it might be a bubble. Until then, it's not even close to a bubble.
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Old 02-06-2013, 07:36 AM   #20
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Mark Dice has a new video out. He offered to give away an ounce of gold if someone could tell him how much it was worth - within a 25% of it's value:

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