12/19/09 Stockholm, Sweden – We’ve discussed the evidence against a bubble in gold before, and now Tim Iacono points out that there’s another reason to be skeptical. Whereas media mentions of other bubbles – like tech stocks, housing, and credit — have seemed to surge in popularity in the news at particular points in time, the concept of a “gold bubble” has been around since at least the early ‘70s… and seems to still have sticking power today.
From The Mess That Greenspan Made:
“The funny thing is, according to this data at Google news, the media has been calling gold a bubble for, not only years now, but decades…
“The news coverage that you see above for the ‘gold bubble’ looks nothing like the other three [bubbles in stock, housing, and credit], rising gradually since 1970, the early-1980s gold price peak almost imperceptible in the graphic. The more you think about it, the more clear it becomes that, William Buiter’s recent commentary may be on the mark – gold may be in a six thousand year bubble and may have another six thousand years to go before it bursts.”
It probably doesn’t make sense to invest with a six thousand year time horizon, but this argument against a bubble offers some interesting support for gold’s price level. See the charts mentioned above and full coverage of the long gold bubble at The Mess That Greenspan Made.
Rocky Vega
Rocky Vega is publisher of The Daily Reckoning. Previously, he was founding publisher of UrbanTurf and RFID Update, which he operated from Brazil, Chile, and Puerto Rico, and associate publisher of FierceFinance. He specialized in direct marketing at MBI, facilitated MIT Sloan School of Management programs, and has been featured on CBS. Vega graduated with honors from Harvard University, where he was on the board of Let’s Go Publications and directed business programs involving McKinsey, Goldman Sachs, and Harvard Business School faculty. He is also enrolled at the Stockholm School of Economics.
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