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.