Investment: Gold – A Bubble Waiting To Pop?
July 14th, 2010
Experts are warning most people now betting on gold going up are doing so just because gold has gone up – the very stuff of bubbles.
Punters should be sceptical of gold around $US1,250 per ounce, almost quintuple its early 2001 price of $US260. Gold ownership is commonly promoted as a hedge against inflation, but there is little sign of inflation and the need for such insurance at $US1,250 an ounce seems limited. Analysts say gold is now being more commonly owned as a hedge against the end of the world as we know it – as insurance against further extraordinary financial turmoil, but this is an unlikely event – however if it were to happen gold prices would escalate.
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Aside from inflation and civilisation’s collapse, ”peak” gold, the idea the world is running out of gold, is also a reason for people to but. This is also a fallacy. At present prices, marginal deposits become viable mines and supply increases markedly.
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