Is it possible for a gold bubble to occur? I know theoretically there is no reason that a gold bubble could not be produced but i have a feeling it is unlikely. The reason i have doubts of a possible gold bubble is that it would be foolish to buy gold with credit and most people who invest in gold are probably doing so to protect real savings in the long term. That being said, is it possible that speculators will jump on the gold train looking for easy profits producing a bubble?
The fed says it will print 11 trillian dollars and throw it to the streets next week. The price of gold soars. The fed was lieing and doesn't actually do this. Gold bursts.
Well, Snowflake already handled most of this question, but read some of the stupidity surrounding the "gold bubble":
http://online.barrons.com/article/SB127508630235098425.html
I don't know what's more irritating, this article or some of the anti-gold articles in the WSJ.
Sure but unlikely.
ABCT does not predict which industries will experience the next asset bubble and over consumption boom, it only says that as long as the central banks keep creating money and credit entrepreneurs will get false signals about future demand and make investments not in line with long term consumer preferences.
If consumers for whatever reason progressively want more and more gold then you would expect to see more mining, more substitutions for gold in various industries and the holders of gold using that gold as collateral for loaning money.
I view a gold bubble as unlikely as unless the central banks and world governments were telling a giant fib or are secretly storing tons and tons of gold, then the amount dollars to buy an amount of gold will continue to increase.
Also the fact that gold has alternative uses will keep the prices from escalating too much and keep the bust down as well.
what would speculators use as a rationale for a gold bubble and how would that work???
would somehow specualtors ahve to convince a lot of people to give them money to somehow bid up gold.....for .....more jewelery than is already being made?? some new miracle cure that uses gold flake in a cinnamony tasting elixir????
eminent collapse of central bank processes due to.....???