Financial Sense Newshour Touches On Gold Bubble

In the usual way, during an interview with John Doody about gold stocks in the third segment of the program [.mp3 file.] Doody said that, based upon his valuation models of proven and produced ounces, the major gold stocks were undervalued by more than 10%. Times when gold stocks are undervalued at that level tend to lead to 10%-or-more overvaluation the next year, but gold itself would have to co-operate to make that overvaluation a reality in 2011.

Doody had an affection for gold royalty stocks, in large part because of their dividend policies. He thought that Royal Gold and Silver Wheaton could be doubles by about 2012.

Regarding a gold bubble, the same talking point was unveiled: despite ads popping up from gold companies to buy gold, the general public isn't really in on the market. The gold shows haven't been that popular amongst the general public. Except for the big names continually unveiled by gold bulls, there's little to no institutional-investor interest in gold stocks. That's in part because the seniors pay little or no dividends, even though their cash flow is coming in strong.


There's little to say at this time about those points, as they're true. Myself, I believe that gold's in a nascent bubble, and will expand into an all-out bubble once a real driver kicks in.


The rest of the podcast largely deals with the new health-care reform legislation.