Awhile back, I asked what the next bubble would be. The answer from HARPER'S magazine (thanks, Louis) was clean energy investments. That may be true (or may not -- it hasn't happened yet). But it's possible that we'll see a bubble before that -- in gold.
Assume that a gold bubble has started, i.e., that it's not just a short-term blip. If anyone wants to wants to buy and hold gold for long periods as a hedge against inflation, it's then too late, since prices are too high. The exception would be if the end of the "long period" is (by coincidence) either at the peak of the bubble or some time after the bubble pops, when gold prices start rising again. (Gold prices should be measured in real terms, corrected for the ability of gold to buy actual goods & services.) As the current bubble grows, the "too late" verdict becomes truer and truer. On the other hand, if anyone wants to speculate by buying now (when prices are low compared to the future peak) and sell right before or at the the peak price, that actually encourages the bubble. It's a big gambling game. The gold-bugs who win at the peak (buying low and then selling high) have to find others who are willing to buy at the high price. Note that the winners' loot corresponds to the losses of those left holding the bag: as the bubble pops, the sellers drive prices down, imposing capital losses on the buyers. Of course, gold pays no interest or dividends. That makes the popping worse, since the only way to win in a bubble is to grab for all the capital gains one can. On another topic, I recently saw the British crime film, THE BANK JOB. Good film. It made another film about crime in England, Woody Allen's CASSANDRA'S DREAM, look even worse. Of course, if I deigned to watch HORTON HEARS A WHO, it would likely have the same effect. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
