Monday, May 3, 2010

Graphical Debunking Of Gold-Bubble Claim

There are those who think that gold is in the climax of a bubble right now. In a Seeking Alpha article, Bruce Pile charts the gold market from 2001 to today and compares it with three bubbles that have come and gone: the NASDAQ (burst in 2000), the Nikkei (burst in 1990) and gold in its last bull market (burst in 1980.) His conclusion:
Long-term bull markets usually end in a parabolic rise. The chart above basically divides these bull markets into the relatively flat 8 to 12 year pre-parabolic phase and the 2 to 6 year parabolic rise. As the chart clearly shows, the current gold market is nowhere near the end phase of a historic bubble. In fact, it looks to be just now getting cranked up for that.

His own take pretty much squares with mine. Gold has yet to enter the parabolic rise of an all-out bubble, but it's getting primed for one. It's still advancing despite it being "unbelievably high."

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