Friday
Oct152010
Ask Neubert: The Gold Bubble - A Very Strange Animal
October 15, 2010 at 4:10 PM
Thanks to Hercial Vitalis for getting back to ranting about the gold bubble again.
Lately, I've received a number of emails from users with various versions of the same few statements and questions:
1) I own gold and it's going to go up forever - the world economy is coming to and end.
2) I own gold and when do I get out?
3) When do you short gold and silver?
My response? As I've said before, I think gold is in a bubble and will only hold a little at this point. And bubbles are strange animals, much stranger than bulls and bears. You never know when they'll pop, I don't like to bet against them.
At $1300, I think gold is overpriced. But even at $2000 I still wouldn't bet against it. In other words, don't get in front of a truck going 100mph the wrong way--betting that the driver will turn around can be deadly. Even if I disagree with the trend, I can't sell short and get in front of this rising gold bull. However, I am already long and ready to sell as soon as I think prices have turned even a bit. Bursting bubbles burst fast!
A few axioms about bubbles:
- Markets are easy to predict--as long as you stick with "where" and not "when."
- As we used to say in our daily trading manager meeting, "the market
will always do what hurts** the most people
NOTES:
**The word we used in trading rooms has been changed to protect the families on
this site.
Disclosure:
I own SLV and GLD .
Disclosure:
This is not investment advice--always do your own research. The opinions of David Neubert do not necessarily reflect those of Kapitall.
Lately, I've received a number of emails from users with various versions of the same few statements and questions:
1) I own gold and it's going to go up forever - the world economy is coming to and end.
2) I own gold and when do I get out?
3) When do you short gold and silver?
My response? As I've said before, I think gold is in a bubble and will only hold a little at this point. And bubbles are strange animals, much stranger than bulls and bears. You never know when they'll pop, I don't like to bet against them.
At $1300, I think gold is overpriced. But even at $2000 I still wouldn't bet against it. In other words, don't get in front of a truck going 100mph the wrong way--betting that the driver will turn around can be deadly. Even if I disagree with the trend, I can't sell short and get in front of this rising gold bull. However, I am already long and ready to sell as soon as I think prices have turned even a bit. Bursting bubbles burst fast!
A few axioms about bubbles:
- Markets are easy to predict--as long as you stick with "where" and not "when."
- As we used to say in our daily trading manager meeting, "the market
will always do what hurts** the most people
NOTES:
**The word we used in trading rooms has been changed to protect the families on
this site.
Disclosure:
I own SLV and GLD .
Disclosure:
This is not investment advice--always do your own research. The opinions of David Neubert do not necessarily reflect those of Kapitall.
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