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Are we in a gold bubble? Could gold prices fall?

April 4th, 2009 · Greg Atkinson · 26 Comments

During an economic crisis many investors head for the safety of gold and there is no doubt that since the global economic crisis began that gold was one of the best places to have your money. But is gold still the place to have your money and is it as safe as some commentators seem to imply? Perhaps gold is now trading at bubble like prices and like many commodities last year,  we will see its price correct downwards.

Back in January I wrote an article about Investing in Gold and I urge people thinking of investing in gold to read this as it attempts to provide a balanced view of the issues related to investing in this commodity. Gold might seem like some super commodity but investors need to take into account that the forces of supply and demand still come into play and can have a dramatic impact on prices.

Also one thing that worries me is that the gold bulls often never mention the fundamentals of supply and demand when it comes to gold…I wonder why? Is is because they think gold is different somehow from other commodities or is it because this undermines their bullish views?

According to the World Gold Council the market for gold in 2008 could be summarised as follows:

“Sustained investor interest in gold over the course of 2008 against a backdrop of the worst year on record for global stock markets and many other asset classes, helped push dollar demand for the safe haven asset to $102bn, a 29% increase on year earlier levels. Identifiable gold demand in tonnage terms rose 4% on previous year levels to 3,659 tonnes. As shares on stock markets around the world lost an estimated $14 trillion in value, identifiable investment demand for gold, which incorporates exchange traded funds (ETFs) and bars and coins, was 64% higher in 2008 than in 2007, equivalent to an additional inflow of $US15bn. Over the year as a whole, the gold price averaged $872, up 25% from $695 in 2007.”

In other words, investors moved into gold because of its safe haven appeal, but what you should also take into account is that demand for gold for use in jewellery and industry fell. This means that basically gold prices at the moment are being supported by investors spooked by the volatility in the stock market and falling asset values in real estate and infrastructure assets etc.

If investors started moving money out of gold back into stocks etc. then the gold price would probably take a significant hit as industrial demand for gold is unlikely to take up the slack in 2009.

If you wish to see the detailed statistics for gold supply and demand in 2008 then please follow this link

So could gold be in a bubble?  Well let first look at the 10 year price chart for gold and see if it tells us anything.

Gold 10 year price chart

If the above chart showed property prices or the stock market then many experts would say it was obvious a bubble was building. But curiously enough many of these same people feel that gold prices are not in bubble territory whereas I would suggest they are, and the only way gold prices are going to hold at these high levels is if the worlds financial markets cannot sort themselves out.

My own personal view is that the gold price will fall back just as oil prices did last year, probably not a big fall, but I think the people saying gold will reach USD $2000/ounce soon sound a lot like those calls that oil would reach USD $200 a barrel last year.

It seems pretty clear to me that the price is being propped up mainly by investors and that there is only so much money that can be moved into gold before excitement begins to wane. Yes the global economic situation is not good, but gold has already run up on the back of a lot of bad news and as they say, all good things must come to an end.

But remember my views are influenced by my belief that the world’s markets will recover and we are not heading for a global depression or any financial doomsday. If I am wrong then gold could very well keep heading onwards and upwards and in any case, if you are a long term gold investor then you may not be worried about what happens with the gold price over the next year or so anyway.

Remember as always, I am not suggesting that anyone buy or sell anything. I am just throwing up some views and ideas that I will hope will help investors sort fact from fiction. If you have a different view of where the gold price is heading then please feel free to leave a comment…I am always open to other points of view.

26 responses so far ↓

  • 1 Pete // Apr 5, 2009 at 11:02 am

    It’s a fairly simple notion:

    a) If you are negative on the prospects of the local and global economies: buy gold.

    b) If you are positive on the prospects of the local and global economies: don’t buy gold.

    Things to agree or disagree with are:
    – threat of hyperinflation
    – threat of deflation
    – threat of gov. intervention in economies doing damage
    – threat of gold being outlawed
    – threat of large-scale gold price manipulation
    – threat of prolonged economic downturn vs. quick recovery
    – possibility of a panic and ‘rush to gold’ due to lack of confidence in fiat currency
    – possibility of gold being used as a global currency (again)
    – other things

  • 2 Greg Atkinson // Apr 6, 2009 at 8:38 am

    Pete the only thing I would add is that we just need to keep in mind that the demand for investment gold is not the biggest consumer of world gold jewellery a long way.

    So it is possible that over the long term, if the global economy gets chugging along nicely again, that actually gold prices will be pushed higher due to an increased demand for gold jewellery. This is often one of the reasons the gold bulls cite for the long term lure of gold as investment.

    However one of the complications when discussing gold is that it is recyclable and much of it is actually not consumed as such but rather parked. This means that you cannot get a true sense of the supply side by just looking at mine output. Some gold bears for example argue there is plenty of gold around and that is it overpriced at the moment based on true supply/demand fundamentals.

  • 3 Pete // Apr 6, 2009 at 9:41 am

    Greg: You are correct when you say “demand for investment gold is not the biggest consumer of world gold jewellery is”, but only for newly mined gold released onto the market.

    Of the total amount of gold in the world, the largest proportion is held as bullion.

    You do raise an interesting point though – gold as jewelry is very important. What I wonder about is why gold is used in jewelry. I figure it is:
    – because it is highly valued
    – because it is easily crafted
    – because it is inert (eg doesnt rust)
    – because it is valued symbolically

    Perhaps I missed out something major there. If gold is used for its value, then doesn’t increased prices make it even more valuable? Yet decreased prices might see people head towards other things like platinum?

    I’m not making a particular point other than to say that it makes sense to me that gold’s value as jewelry would tend to increase as the price increases. Whether that means more purchases of gold is another matter. I guess we could always look at the market for gold jewelry purchases too…eg: which countries are buying? India?

    I had a friend in the US about seven years ago that worked in the jewelry business. She said she was stocking up on gold (not sure if it was bullion or jewelry stock) in a big way because she thought it was an excellent investment.

    Turns out she probably did really well for herself if she kept at it. My point here is that I wonder if all the gold used for jewelry, actually goes into jewelry – or is it just claimed as jewelry?

    Another point might be that jewelry is often seen as an investment – it holds its value pretty well. It doesn’t necessarily go from being ‘tradeable gold’ to ‘trinket’ so easily. Ask any pawn shop.

    Then we hear about people in india melting down their jewelry to sell it. I expect that the proportion of melted down jewelry is only a minute amount compared to all jewelry made. My point is that we don’t necessarily know which part of the jewelry is still jewelry (although I suspect it wouldn’t differ that much).

    So i’m not really disagreeing with you here, just bringing to light some other factors I think are relevant. I appreciate your seemingly contrarian view on gold (although I don’t think gold is that mainstream yet), however I am still positive on it insofar as I see people are emotional.

    financial issues/inflation = fear = rush to gold
    (I think it will happen big time)

    I know I would rather have 100USD worth of gold, than 100USD.

  • 4 Pete // Apr 6, 2009 at 9:47 am

    Oh I forgot to mention that new gold is becoming increasingly expensive to mine too. That either means, reduced supply due to it not being cost-effective to mine (less supply = higher prices) or…higher prices.

    If the gold price drops below $600USD, a lot of gold companies would go bust.

    So I wonder if the price of gold will correlate slightly with the price of oil/energy? Eg, if we have an oil spike, will that push up the price of gold at all? At this stage I have no idea.

  • 5 Greg Atkinson // Apr 6, 2009 at 11:37 am

    Pete I have seen a few theories linking gold and oil prices and a person who knows quite a bit about gold mining once told me that oil was a major cost factor for gold miners. There is also an average production costs for gold per ounce and I think it was around the USD $500 – 600 mark but this is not terribly useful since some gold mining operations are very expensive and this pushes up the average.

    I did a Google check a while back and found some oil versus gold graphs and they looked fairly closely aligned although like many other things, this correlation has broken down during the GFC. I would guess gold miners are in a sweet spot now with lower costs and high prices….but how long will it last?

  • 6 Pete // Apr 6, 2009 at 1:03 pm

    ” I would guess gold miners are in a sweet spot now with lower costs and high prices….but how long will it last?”

    I agree with that, it seems gold miners have it great.

    What worries me is if the price of oil rockets up, but the price of gold lags…how long can the smaller producers keep producing at a loss, before the gold price catches up? Or will the smaller (or larger?) producers go out of business, creating a supply shortage?

    One of those lovely ironic situations whereby low profits mean exploration and production is not cost effective – so supply is reduced. Then, due to the reduction in supply, prices rise, however the damage has already been done and the supply cannot just be ‘switched on’ so quickly. So prices spike (in theory?).

    So much to speculate about here, but I think these things can be volatile so it is so hard to tell.

  • 7 Greg Atkinson // Apr 6, 2009 at 2:44 pm

    Pete I think we both agree it is a complicated world out there for gold..and oil etc. Actually this is why I started getting out of some mining stocks simply because it is really hard to work out if they are a good miner, or just one that is going to flop when boom passes. (i.e. they are not very good at what they do but high commodity prices makes them look good) In terms of gold both the bulls and bears have pretty solid cases and so this confuses me even

    I am not what you would call a gold bear, but I do see some problems with prices at levels around $1000 USD an ounce at this point in time.

    I wonder how much high gold prices hurt companies that need gold for industrial purposes?

  • 8 8020 Financial // Apr 6, 2009 at 5:58 pm

    Hi Greg,
    Gold is a tough one.
    I agree there is clearly some dotcom style speculation going on, hence the crazy volatility of it. There also seem to be a lot of nutcases getting on the ‘buy gold’ bandwagon in the past year or so.
    I lean towards the deflation hypothesis for the next year or so, which should be alright for the price of gold, but not as ‘good’ as the hyperinflation hypothesis popular in many quarters (i.e. Japan not Zimbabwe).
    But I can’t help thinking people who buy and hold gold now will be rather pleased with that decision in 2012 or thereabouts. I guess it depends on how bad things really get. Certainly I don’t see any genuine good news round the corner, the current stockmarket rally aside.
    What a world we live in though, where we can’t just leave our cash in the bank and forget about it.

  • 9 Pete // Apr 6, 2009 at 7:16 pm

    I’m with you 8020. Well said.

    Greg: One thing that convinces me that prices are not ‘high’ now is the 80’s spike. When inflation adjusted, it went much higher than what we have now:
    (ignore the site I got that chart off…’google images’ again. It’s all over the place)

    Human nature tells me people will rush to gold when they realise their cash and assets are so vulnerable. It’d be nice if that didn’t happen though.

  • 10 Greg Atkinson // Apr 6, 2009 at 7:38 pm

    Thanks Pete. That is a really good graph. Often makes sense to price everything in “today’s” dollars. Wish it was done more often.

    I guess it is easy to see why there are so many gold bulls out there!

  • 11 Pete // Apr 6, 2009 at 10:36 pm

    What is scary is the length of the bull run. The best part of it is only about 2-4 years worth.

    Then the question is, what do you trade your gold in for if you think it’s a bubble? I mean, can you trust fiat currency?
    It gets messy real quick, but that is something to worry about if we get to that stage. Speculating on that now will only serve to confuse.

  • 12 Pete // Apr 7, 2009 at 12:12 pm

    This graph is quite interesting too:

    Same deal, just way back to 1900.

    It makes $600 an ounce not look so bad…although the market has dramatically changed since 1900.

    It’d be an interesting fall from grace if gold plummeted and never recovered. I feel somewhat irrationally bullish towards it – probably a bit like the real-estate bulls at the moment. I’ve been looking at some trends and assuming they will occur again.

    I think it really depends on the Government intervention(s) now – they are the deciding factor that will affect consumer confidence in fiat money in the future. They actions they have taken so far are awful (eg money printing).

    However I do wonder what the effect of a Global fiat currency would be on the price of gold. Would people see no need for gold anymore and ditch it? Or would they become even more scared? I think gold would drop personally.

    If the Euro is anything to go by, a global fiat currency backed by nothing but an institution and laws would probably fail pretty badly. It only takes one country to be deliberately relaxed on counterfeiting and the whole system is skewed. Also people might get upset with trade and hoarding, etc. Eg, if China saves a trillion ‘new’ dollars…it can just keep it and not worry about the USD inflating it away.

    But…as has been said by many before – gov’s won’t easily give up their ability to manipulate their own currency. It is seen as a powerful economic and political tool, regardless of the negative implications.

    Okay, tangent over…

  • 13 Greg Atkinson // Apr 17, 2009 at 10:45 pm

    Pete, thanks again for posting the graph and making some interesting points.

    I think the the curious thing with the graph is they highlight that gold is below the 1980 prices but my response would be The current gold price is also above the 2000 price, so exactly what is their point? Actually if you look at the prices from 1900 then gold looks expensive now? isn’t it true that if gold can jump up to reflect fear then surely it can also just as easily fall when fear subsides?

  • 14 Senator13 // Apr 18, 2009 at 11:47 am

    I do not know much about precious metals – would the same points hold true for Silver?

  • 15 Greg Atkinson // May 2, 2009 at 12:07 pm

    Senator13….Silver is different to gold mainly I guess because tonnes of the stuff aren’t not sitting around in vaults. However I see plenty of people on Bloomberg etc. saying they are bullish on gold and silver. From what I have read the industrial demand for silver is increasing yet on the supply side it seems to be getting harder to to find new deposits. (but who knows..the mining companies tend to always talk up demand and talk down supply)

    You can find some good information on the demand for Silver here:

  • 16 Ned S // May 2, 2009 at 8:38 pm

    Greg – I can confirm that the price of oil (the cost of diesel specifically) has a significant impact on a large scale modern gold producer’s costs.

    Some further comments on the off chance they may be of use to anyone:

    A lot of capital is invested in setting up a large scale modern gold producing operation. These big boys are working large ore bodies. They planned to be around for a while when they initially set up shop. And the longer they can make it, the better they like it – Because a lot of the money went in up front as infrastructure costs – They want to milk every last possible cent out of that investment. (As would I – Smile!)

    They can and do review their life of mine projections based on their best posible gold price guestimates and their production cost projections. (The gold producers of the world are not an old style De Beers diamond cartel. They don’t control the price of gold. But they will take whatever the market is prepared to pay them for it and say Thank you.)

    They can hedge their bets a bit by forward selling. But that practice has gotten considerably less popular than it used to when gold prices were lower is my understanding – Although I guess at current prices some of them might be considering/could have been doing, a hit of hedging by forward selling more recently; Based on all sorts of factors – General ones, plus ones that are more specific to their particular operation, including their Life of Mine projection perhaps?

    But they can and do respond to changes in gold prices. They typically can’t “spin on a top” of course. But they surely can respond. Aggressively if necessary. And certainly more quickly than some people might think perhaps?

    As for the small marginal producers – Well they simply go broke and close up shop if prices drop. But that probably won’t affect the price of gold very much (if at all?) because:

    a) They were never producing much anyway, and

    b) In a tough environment where gold prices are down (as well as cutting the costs they do control – there is always a buck to be saved somewhere if one is motivated enough to look for it), the big boys will be doing things like ramping up on their tons mined and mill throughput volumes to get the most possible ounces popping up at the end of each gold pour to compensate for any fall in their profit margin per ounce that has been caused by rises in their costs, and

    c) And they have an edge on many miners in that regard I suspect? While I’d suspect there are some differences in the value of some barrels of oil over other barrels of oil, and some tons of iron ore over other tonnes of iron ore, and some tons of coking coal over other tones of coking coal (re quality/grade?), big gold miners are typically sitting on an ore body that contains High, Medium and Low grade ore. (The cutoffs between those grades are very different from operation to operation of course – Based on things like sulpur content, whether you need autoclaves to burn off the sulphur, how geographically isolated you are [that affects costs], how much “persuasion” money you have to pay out to operate, what environmental and other legislative restrictions you are operating under, are you pulling ore from underground or open pit or both etc, etc, etc.) But irrespective, they have patches of really profitable dirt mixed in with all the other bits. And if they are any good, they have a bit of an idea from their drilling, just what is where and how easy (or difficult) the really good bits might be to get at. So they can hit them if they especially need to just maybe. They probably won’t enjoy doing it – Because if messes up their mining plan and costs them money long term. But if it a matter of Hey, we need to do this to stay in the game – the answer is going to be Then so be it! Because, ultimately, if worst comes to worst, and they do have to close up shop, they will at least walk out knowing that they got the very best stuff.

    Interesting Blog topic Greg – I’ll try to write a bit more on it from a more macro/longer term perspective another day.


  • 17 Greg Atkinson // May 2, 2009 at 9:31 pm

    Thanks Ned S. You comment adds a lot of value! By the way I fixed some entry problems you mentioned earlier 🙂 When you have time please share with us more of your insights on gold as these are sadly lacking from my original post.

  • 18 Ned S // May 6, 2009 at 5:25 pm

    The graphs indicate to me that gold has been in and out of bubbles ever since Nixon abandoned the gold standard in 1971. The question is; Are we still in the earlier stages of this current bubble, well into it, or pretty much toppish?

    No answer at all from this corner sorry – But some comments: I incline to the view that there is no gold shortage as such. (For lots of reasons.) But either way, at USD 800 per ounce “everyone” wants to be a gold producer – As in you don’t have to be especially efficient or smart or even sitting on an especially great ore body to make money at those prices. (Hey at USD 250 an ounce in 1999 it was tough but still just doable for good operations. Although at USD 500 per ounce it is a bit of a cakewalk I suspect?)

    But I also accept that people love bubbles. And also have to admit to a personal bias – Namely, having worked fulltime in the industry for a decade or so (with a casual association dating back about 5 years before that), it could be a case of familiarity breeds contempt in my case?

    But put simply, I’d rather own a real basic house than 8 kg of gold – PS: Gold is pretty heavy – 8 kg isn’t much – Your laptop weighs maybe 2.8 kg? And lots of it is air and plastic, Yes? 8 kg works out to be maybe 425 ml – Less than half a litre of milk in volume.) A house or half a litre of gold??? – I’ll take the house thanks. And hit the local creeks with the rest of the Zimbaweans to pan for gold on the chance we should hyperinflate.

    But irrespective of what one places value on, what I do know looking at all those graphs, is that while the wild ride up from 1971 to 1980 might have been good fun (especially for those who had the nerve to hold during the downward blip in the mid 1970s), the gut wrenching drop from between 1980 and 1982 followed by close on another 2 decades of grinding downward attrition would have been a very unhappy thing to be caught on the wrong side of. Certainly not to my taste anyway.

    Having said that, I own enough gold to pay the local government charges on my home for three years – “Just in case” as they say.

    And 22 and 24 carat gold jewlery IS exceptionally pretty – In my opinion at least. And given it’s volatility, gold can be lots of fun to trade – I sort of think of it as a big night out at the casino that can be stretched out over many months with a bit of luck and fortitude. (Often regretted the next morning regardless; But jolly good fun at the time.)

    Cheers to all!

  • 19 Ned S // May 6, 2009 at 5:47 pm

    Senator13 – I have no idea why, but silver seems to be even more volatile than gold? (Perhaps Greg can/has explained why? Didn’t have time to dig through the full blog – Sorry.)

    But as a bullion buggish type chap I follow once commented re Silver “A darn good way to get your heart torn out.” (If I recall correctly and I think I do.) Not that he was saying don’t buy silver; Just commenting on the risks. Wherewith go the the returns I suspect.

  • 20 Greg Atkinson // May 7, 2009 at 8:28 am

    Ned S – my own feeling is that the gold price is above level it should be if you take into account supply and demand factors. The relative high price of gold at the moment appears to be directly related to the financial crisis and so if this eventually works itself, then I can see no reason why gold will fall back to it’s normal trading range as it has done in the past.

    Now over the longer term I guess gold will appreciate in value, but so will a tonne of wheat I dare say so I am not sure why the gold bulls feel the only long term value storing asset is gold. If I thought the world was about to fall in a heap I would prefer to have a silo full of wheat rather than some gold bars in my fallout shelter 🙂 (oh and of course I would want a home as well!)

    Of course gold could go up much further if the global financial crisis takes a nasty turn or if people keep moving funds into gold. But at some point (and I have no idea when) I feel the price will correct downwards.

  • 21 Ned S // May 7, 2009 at 10:50 am

    Greg – My general feelings are much the same as yours by the sounds.

    About the most convincing argument I’ve heard from the gold bulls is that long term, gold will always buy pretty much the same number of loaves of bread. But given a bit of a think, that tends to tell me that what even the gold bulls really value is bread perhaps? And Yes, in fiat based monetary systems where positive inflation is intentionally targeted, cash is cetainly not something you want to be placing too much faith in to hold its value long term. So I appreciate the very strong desire to look for alternatives.

    The following give a bit of a feel for what current production costs of gold might be:,22049,25407841-31037,00.html

    Not too many of those producers will be shutting up shop at a price of USD 500 per ounce I suspect. Although some of them will be putting a lot of thought and effort into improving profit margins that have definitely gotten way lower than they’d like to see them.

    I also notice that “Russia’s gold output rose 42% in QI, mainly on a better than 51% gain in mine output.” (And you can bet they aren’t producing more because they are losing money on it.)

    As I’ve said peviously, at prices of USD 800 per ounce, “everyone” wants to be a gold producer – This is “make a killing” type material from a producer’s perspective.

    It was a good few months ago so I won’t look for the article again, but recall reading that China wanted in a lot at those prices – As in they figured they had some (or quite a few???) ore bodies that could be exploited very profitably at those prices thanks.

    It’s difficult to recall real specifics but about as close as I can recall/judge by looking at prices about that time, one big producer I knew went from a perspective of These are our plans for winding down the show and brace yourselves because it will happen at a price of maybe USD 450 per ounce in 2005 (?) to a plan of Life of Mine extended at a price of USD 600 per ounce and holding in 2006 (?)

    There was a nice little spike about that time with prices going from USD 450 to 700 before dropping back to 600 and continuing up since then. I distinctly remember one of the wits commenting at around the 560 or 570 mark “Quick, buy now before the crash!” He was wrong of course. But that still doesn’t change the fact that big producer’s are doing very nicely at 800 per ounce.

    It’s just a matter of how much of a premium one is prepared to pay for a bit of insurance, plus deciding just how much insurance one wants (and can afford given the price.) And given the risks … Because if this stuff does zip up to USD 2,000 or even way higher as some of the real bullion believers seem to feel it could (and even should?), then the downside risks of that are rather frightening for anyone who inclines to the view that while History may not repeat itself, it certainly does sometimes rhyme.

    In that regard, if I was seriously interested in gold, I’d be inclined to spend a bit of time having a very close look at the various up and downs of gold in between 1971 and the mid 1980s re what was happening in America re debt, inflation etc and what was going on the Middle East that was affecting oil prices/crises, any major stock market ups and downs around then plus also doing a bit of research on any major production technology breakthroughs the industry came up with over that time and since.

    But then as an Australian, one would probably be wanting to do their thinking in terms of AUD rather than USD because the exchange rate has certainly changed a lot over that period as well.

    But I’ll leave it all well alone. Too much effort for mine. For a commodity I don’t have a really serious interest in?

  • 22 Senator13 // May 7, 2009 at 4:19 pm

    Interesting insight guys, thanks.

  • 23 Greg Atkinson // Jun 12, 2009 at 8:19 pm

    Ned – thanks for the links..very interesting. I was told a while back that the “average” production cost for gold is around $400 USD an ounce and so the link to Barrick Gold is very interesting. I think we all know that at present most gold producers are doing well and are cashing in much like oil producers were doing in 2007/2008.

    As you mention, companies will be digging up as much gold as they can even when the production costs are much higher than the average. But once the fear premium is removed from the gold price we end up back in the old supply and demand story, and this will not support gold prices as high as they are now in the short – medium term.

    To buy gold at current prices (around USD $950 and ounce) means that I would have to think the global economy is going to get a lot worse or I am waiting to cash in on some unexpected event that will push prices higher. Personally I think we have seen quite enough bad economic news to last us until the next crisis and waiting for an “unexpected” event is akin to gambling, so I will not be buying any gold for a while 🙂

  • 24 Ned S // Jun 16, 2009 at 6:27 pm

    Greg – At current prices I don’t believe we are dealing with long term buy and hold types. I think an Aussie would want to put a lot of thought into figuring out where gold might go in AUD, given that AUD buyers and sellers of it won’t be the ones moving the market.

    Is it different this time? (Compared to that 1970s run up and 1980s crash I mean.) It could be for any nation that loses the plot and really does trash its currency.

    But I honestly can’t even see the US Fed being that silly? And I’m punting that Oz is even less likely to. So we are looking at a highly tradeable and volatile asset – Which isn’t something I’m naturally drawn to. And either which way, it is an awfully complex AUD trade for mine right now.

  • 25 Greg Atkinson // Jun 16, 2009 at 9:57 pm

    Ned S – yes I agree that when you start bring in the AUD and exchange rates it all gets very messy. If gold prices went down towards say $500 USD an ounce then I would be interested but at current prices gold is not for me.

    There is also a lot of misinformation around. According to many gold bulls the demand for gold outstrips supply. But according to the information here: Gold Annual Total Demand and Supply there is no impending shortage of gold and the only real surge in demand has been for ETF holdings but this is just a small part of the annual demand story. (and this can come back into the supply side anyway if ETF’s start selling the stuff off)

    The more I look at gold the more I see a bubble.

  • 26 Greg Atkinson // Jun 19, 2009 at 9:10 am

    NEW YORK (Reuters) – Oil and gold are overvalued at current prices, which do not reflecting their market fundamentals, economist Nouriel Roubini said at the Reuters Investment Outlook Summit on Tuesday.

    The full article is here: Roubini says oil, gold look overpriced

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