Bubble Theorists Silent as Gold Hits Record Highs6 comments
http://seekingalpha.com/article/198226-bubble-theorists-silent-as-gold-hits-record-highs
Last week saw a record high in the gold price in pounds, a record high for the gold price in euros and a four month high in US dollars.
It's been an extraordinary week for bullion. The gold price rose 2.44 percent against the pound. On Thursday the precious metal rose to an all time record of 757.9 pounds.
A similar pattern played out in the price of gold against the euro and the US dollar. Gold rose 3.17 percent against the euro and finished the week at 860.1 per troy ounce. Earlier on Friday the precious metal hit an all time high of 864.7.
No Gold Bubble Speak Indicates a Change in Thinking
What's important to note about the latest gold price rally is the lack of voices repeating the argument made back in December. Then, when the gold price set a new dollar high of $1,227, there was a growing number of market experts referring to a gold price bubble. Amongst them Nouriel Roubini and Fund Manager George Soros.
The media attention this received at the time was wide spread. Popular news stations ran it on television, publications published it in magazines and online. Everywhere, it seemed, was broadcasting the same message. And, sure enough, popular opinion turned to believe in the experts opinion. And it proved correct... From the December high the gold price dropped to a low just above strong support at $1050. We called it here after seeing a huge change in sentiment.
Today the gold price is reaching the same highs but no gold bubble speak has been expressed and that's important.
This could all change tomorrow, all it takes is one highly respected figure to whisper those bubble words and the media will be pushing the message. But nothing has happened yet, and in our opinion, its omission so far leads us to believe it's because of a wider change.
Back in December the recession was taking its grip. The tide of money that had driven up the price of gold was a flight from risk in currencies. That reason still exists, only now it's even bigger.
The recent Greek crisis and the problems experienced and in the pipeline for Britain, Portugal, Ireland, Dubai, America and others has completely moved the goal posts. Compared to December, there is now more of a possibility that a major currency will lose value due to the economic and political manoeuvrings of governments around the world. The markets have seen how drawn out the Greek crisis has become. They’ve started to question what impact another sovereign problem, along the same lines of Greece, would have on currencies.
Problems in the euro, the pound and the dollar are pushing demand for gold to all time highs. The painful process of sorting out bloated economies is starting. As more take action to wean themselves off of the huge quantitative easing measures we’ll surely see more upset. Greece fired the warning shot and it’s sound has been so loud we no longer hear the gold bubble whispers.
Stay with us for next week as we see how the markets react to the new eurozone plans and what they mean for the gold price.
Disclosure: No positions
Posts
