Tuesday, February 1, 2011

TheDailyGold's Take on Gold

Surprise! It's bullish!

February 1, 2011
Here is how and when Gold will begin its bubble

First of all, why is gold capitalized? The only reason I can think of is that maybe gold has reached deity status. That alone should be enough to make you wonder about the bias in the article and the amount of upside potential left in the gold bull market.

The bull market in Gold is in its 12th year (globally it began in 1999) but has yet to exhibit any “bubble-like” conditions.

Gold hasn't experienced any "bubble-like" conditions other than rising in price by 400% in just one decade, it is well above its long-term inflation adjusted average, it is seen fairly often in TV ads, it is heard fairly often in radio ads, and people are now choosing to capitalize it as one would capitalize an omnipotent being. Other than that though, no bubble-like conditions exist I suppose.

Institutional accumulation began in 2009 (e.g. Paulson, Einhorn) and we know that phase lasts at least a few years before a bull market gives birth to a bubble.

That's funny. I was under the belief that institutional interest in gold began when the GLD fund was launched back in 2004. Correct me if I am wrong, but it was an institution that offered the fund. That was over 6 years ago. Perhaps institutional investors wanted retail investors to get in first and reap all of the rewards? Yeah, right! Wouldn't that be the day.

Part of the problem for Gold has been the solid performance of other asset classes through most of the Gold bull market. Stocks performed very well from 2003 to 2007 and from 2009-2010.

Stocks had solid performance? Hahaha!

According to Kitco, gold began the bull market on July 20, 1999. Its price was $258.25. It now trades at $1,331.70. That's over a 400% increase. This article would have you believe that the gold bubble hasn't even started yet. Historians will look back and pick a date later than 2010 as the starting point? Did I just fall off a turnip truck because that sure seems hard for me to believe?

According to Yahoo, the S&P 500 closed at 1,377.10 on July 20, 1999. As of right now, it only trades at 1,304.39. That is clearly not solid performance "through most of the Gold bull market." That claim is provably untrue. It does not even require me to subjectively evaluate it.

Precious metals have been in a steady bull market for almost 11 years. During most of that time, stocks and bonds have performed reasonably well.

How can anyone in their right mind possibly think that stocks have performed reasonably well over the past 11 years? How can anyone think that institutional investors have only recently taken a shine to gold? But most importantly...

How many people really think that Gold should be as well capitalized as the Father of Gods and men? Pun intended.


Mr Slippery said...

The mighty gold bull market is due for a rest because I have stopped accumulating it with my prodigious and market moving cash pile. I made my last physical purchase of the year last week.

Instead, my attention will be focused on the kids' college funds and mountain bikes for the mrs. and me. Hopefully it will lead to a sustained inflation of calf muscles.

Also considering a handle change to Slippery Dirty-Money.

GawainsGhost said...

This is why I don't dabble in the "precious" metals market. The people who are selling gold at $1000/oz are the ones who bought it at $500/oz. The people who are selling gold at $500/oz are the ones who bought it at $1000/oz.

And what are they buying and selling it for? Paper money.

I'll keep my cash, thank you very much.

Stagflationary Mark said...


Neither of you capitalized the word gold!

Mr Slippery, you are the worst heretic of all. You capitalized "Dirty-Money!" Shame on you, lol.

You must be praying to the king of the "mountain bike" gods!

Mountain King Bubble!

Oh the hours I spent playing that one. No joke. Very addicting.

Mr Slippery said...

Mr Slippery, you are the worst heretic of all. You capitalized "Dirty-Money!" Shame on you, lol.

Guilty. Will capitalize Gold from now on, at least as long I own it.

Just found out dirty-money is being used by someone named Sean Combs, so I will have to stick with my old handle until something better comes along. Maybe "old dirty bullion"? I am feeling weird today.

Stagflationary Mark said...

Dear Mr. Slippery,

We regret to inform you that the "dirty money" was seized by Agent Combs as part of Operation Treadstone.

We apologize for any inconvenience this may have caused you.

Jason Bourne

P.S. Should we receive any further complaints we will be sending you a special asset that can help clean up any loose ends.

remy said...


FWIW I shorted gOLD last week...



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Stagflationary Mark said...


Wow! Crossing my fingers for you. If I was forced to choose between owning it and shorting it, I'd be right there with you.

Nobody is forcing me though and I'm a coward, lol.