Is there a gold bubble 2011?
I’m hearing a lot of talk about a gold bubble so clearly people don’t understand gold’s role in this type of economy. I’m not sure if it’s the fact people are listening to Ron Paul or if this is propaganda driven but the price of gold as it stands now is at a ridiculous price. A brief history about gold and silver for people who don’t know; is Gold and silver used to be currency. Money before 1971 used to be backed by Gold which made Gold money but since then Gold has turned into an investment.
By Investment I mean gold is in the same boat as oil, copper, silver and other things people invest in. The problem with gold in this equation however is Gold doesn’t do anything productive. Gold is used mostly for jewelry and other luxurious things. Gold doesn’t help anyone and Gold as it stands now doesn’t do much industrially, it’s typically dug up from the ground and thrown into a safe. What’s giving gold value right now is ultra conservative propaganda.
Is Gold Propaganda driven?
There are a lot of ultra conservatives in the United States that have embodied political posturing against Obama and the Democrats which in reality has done more harm than good for the world economy. For whatever reason; they’ve decided to attack world governments where it hurts them most their currency. When you attack currency or paper money there is only one place to go and that place is Gold and Silver; which in the minds of older individuals is old money. By people switching their portfolios to Gold it’s actually destroying the world’s economies.
The reason the Gold standard was removed
In order to give all people a fair shot at wealth President Nixon removed the Gold standard from people’s money. What people need to understand about Gold is that under a gold standard those with the gold rule. That is not the case with paper money the reality is that with paper money the people rule well actually what I should say is that’s how it’s supposed to be.
When to pull out of gold
As it stands now and well into 2012 I personally believe that the price of gold will remain high the key things to watch out for when it comes to gold is “interest rates going up”. As it stands now it sucks to be a saver and until it makes sense for everyday investors to invest in their currencies Gold will continue to rise. If you’re wondering why they haven’t raised interest rates it’s because people are not buying anything people have lost faith in their governments which is causing the governments to print more money which right now is causing people to run to the anti-growth gold markets.
The funny thing about all of this is that the Gold standard was removed for times like the times we’re experiencing now. If we had a Gold standard at this time we would all be screwed. The thing people need to understand is that booms and busts happen all time. There are good times and bad times in everything; just be thankful that we don’t have to wait on the people with all the gold to save us from this mess.
Final thoughts on Gold and what I will be doing
The economy is on life support right now and we need something new and innovative to jolt the economy to get people to spend again. Personally I think changing the business laws in the United States would help people develop the innovative creativity that the world so desperately needs right now. Gold is a very volatile investment; once this innovation touches down the gold price will tumble so be on the lookout.
There is no gold bubble just be smart; remember to be on the lookout for a brand new innovation and also make sure you sell once you start hearing about higher interest rates. Higher interest rates will cause people to first run into Gold and then run out. For the record I do not give financial advice, what you’re reading on this post is what I will be doing.
Since there is really no objective way to value gold it will always be difficult to know for sure if gold is overvalued or undervalued. What is clear though is that a lot of speculative money has poured into gold in the past few years. We will see what will happen when that speculative money starts pouring out of gold.