September 22, 2009
Gold's No Bubble - David Serchuk
It's tempting to consider gold overbought. It currently trades at $1,017 an ounce, an all-time high. It's survived two asset bubbles with flying colors. It sells for three times its April 2001 decade low of $255 an ounce.
Two quick comments.
First, when people tell me that something is not a bubble and state it as fact, then I tend to get a bit nervous.
Second, since when is 3.988 times ($1,017 / $255) rounded down to "three times"? Call me crazy, but I might be tempted to actually round up.
Before you continue to call me completely crazy though, consider what this VERY same author wrote just over three years ago.
May 8, 2006
Make Money In Real Estate - David Serchuk
That sound you hear is the real estate bubble popping. Or so thinks Wall Street. When new home sales slipped 10.5% in February, it gave fresh evidence of the long-expected end to the housing boom. Homebuilder stocks are down as a result. Maybe that's unjustified: The big builders will tell you that an industrywide falloff in home starts lets these well-capitalized companies steal market share from the small-time developers, who are still numerous.
Yes, that's right. He was heckling the popping of the housing bubble and told us we could make money in real estate. How did that work out?
In my opinion, in order to justify gold's current price then inflation better show up at some point. Further, if inflation does show up there are probably better things to hoard than something that has already risen by a factor of four. Toilet paper continues to come to mind. Just a thought.
I know this isn't going to be popular with the gold bugs, but I just call it like I see it. I'm not saying gold is in a bubble, but I certainly have no interest in buying it (again) at these prices. There is serious risk at these levels and that is not something I look for in a "safe" store of value. Maybe that's just me.
Of course, we'll know one way or another in the coming years. It will be interesting to see what happens.