Fools Gold … The Next Bubble to Pop

You cannot eat it, it pays no interest, however, you can gamble with it and try to make your fortune. The reality is, most people who speculate in gold will lose their shirt, while a few people, who feed intellectual propaganda to the media, will be laughing all the way to the bank with a fortune in the currency they are telling people is going out of fashion.

Gold does have some industrial uses, it is also used for jewelry and cosmetic teeth fillings. In my humble opinion, if it only traded on supply and demand basis, the price would be somewhere around $300 an ounce, given the state of world economies. As I write these words, gold is trading at $1230 an ounce 300% more than the supply/demand may be worth.

It has taken a few years for the mania to take hold from the lows of $255 an ounce a few years ago. It fell from $800 an ounce in 1982 and it has taken 28 years to get to today’s levels. The obsession for speculating in gold may go on for some time, but the higher it goes, the more the risk/reward ratio increases and the steeper the drop. For those folks who believe in the myth that gold is a safe haven in times of turmoil, that may hold true for a short while, but just like all other myths, it soon disappears into the fog of smoke and mirrors.

At some point the bubble will burst as it did with oil when it traded at $147 a barrel. I warned people then and very few in the mainstream media took any notice. So, if you think you are missing out by not trading gold I suggest you go back to bed until the feeling wears off. Then go out into the fresh clean air, find a park and feed the ducks.

http://www.pointoflife.com/

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