The rumors say a gold bubble burst is within the near future. Investors have perceived gold as a safe haven during the global financial crisis. The global financial crisis is ending which means the gold bubble might burst, although it rose since October 2008. If the markets continue to rally, the demand for so-called safe investments like gold will fall. Gold went down quite a bit already from June 21 from $ 1,266.50 to $ 1,185. Article resource – Falling gold price could mean the gold bubble is about to burst by Personal Money Store.
Knowing when the gold bubble will burst
It can be a sign of the gold bubble burst the gold prices are so unsteady. Brian Rezny at Seeking Alpha writes that India and China, the world’s first and second largest gold markets respectively, are purchasing a lot less gold. He said that gold is a commodity with a value based upon entirely on the assumption that it will increase in price. Gold became a safe haven during the global financial crisis based on perception. The only reason gold is valuable is because investors have believed it is valuable. A gold bubble burst would change that perception overnight.
Market in Europe changes because of credit crisis
One reason the gold bubble may be about to burst is since the markets may have exaggerated the effects of the credit crisis in Europe to the global economy, as outlined by Ron Acoba at Daily Markets. Acoba explains that there isn’t any effect on their business with the whole credit crisis. Rezny said the gold bubble is about to “end in tears,” and the recent decline in gold prices will get worse. Similar to what is happening now, gold peaked at $ 850 an ounce in 1980. Adjusted for inflation, that $ 850 was equal to $ 2,300. And then it tanked, falling to $ 253 by 1999.
A safe haven gets risky
Since many have bought gold, the gold bubble has gotten huge. Celebrities are endorsing gold. Hucksters like Glenn Beck are convincing average people to dump a large percentage of their investment portfolios into gold — even their life savings — to be safe when the global economy collapses into the stone age. Beating Broke is concerned about what will happen after the economy recovers. Gold buyers will be sad to see their investment of $ 1,100 or $ 1,200 an ounce change to be $ 800 or $ 900 an ounce instead. If these investors lose 30 percent of their savings or portfolio, the gold bubble will burst. The price of gold will drop even further as people rush to sell off their holdings. True believers in gold will lose even more.
Daily Markets
dailymarkets.com/forex/2010/07/28/did-the-gold-bubble-just-pop/
Beating Broke
beatingbroke.com/is-gold-the-next-bubble/
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