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Gold, What is it Good For? |
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Thursday, 21 February 2008 |
...and why is it so expensive?Gold, platinum, copper, every time I subject myself to financial news media I'm inundated with bullish reports on precious metals. "Gold is at record prices!" "Gold is going to $x,000!" "You can own gold, too!"
Well then its official. The gold bubble is here.
As a personal rule of thumb, I consider any asset being hyped this much is approaching bubble status. Gold has a place in the market, as do other metal commodities like copper and platinum, but its place doesn't justify a long-term rise in price. I'm not saying it won't go up for a while longer, but if you're going to jump in you better play it safe (Read Gold as the Next Bubble Instrument for a realistic and safe view of how to approach gold investments). Gold as an indicator of uncertaintyWhere most commidities have utility in manufacturing and personal consumption, gold doesn't have any practical use beyond jewelry - and that isn't very practical. In the financial markets, it is seen as a source of "stability" against currency problems but that isn't accurate either as gold prices have experienced their own dramatic declines. Instead, I take the view that gold prices go up when investors are fleeing popped bubbles and uncertain about where the next one will be. In this sense, gold is a function of indecision or hesitation. CNBC (GE) wants another Government inflated bubble In between pushing gold futures, the hosts on CNBC complain that the government hasn't done enough to lead investors on the quest to build the next bubble. In an oddly honest book review, they discussed the nature of our federally manipulated economy and the very temporary profits created through subsidy and regulation. The only problem (according to them), is that the government hasn't made a new one yet. Makes sense since the corporate strategy over there at GE seems to involve acquiring as much federal funding as possible.
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Last Updated ( Wednesday, 09 April 2008 )
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