|
A few weeks ago, I wrote a post criticizing the fear that something
must be done to counteract investment bubbles. I said that one of the
problems is, how do we even know if we’re in a bubble? I wrote:
How
can we be sure it’s a bubble when an asset inflates? In the 1950s,
napkin rings prices soared and they never really came back down. The phrase
“permanently high plateau�hasn’t had a good record since the 1920s,
but I think that’s an accurate description of what happened in the
1950s.
Is gold a bubble right now? What about oil? Or the Euro? Or could
it be that we’re simply adjusting to a new era of commodity prices? I
don’t know and for now, I’m happy to consider these open questions. I
will note, however, that adjusted for inflation, commodity prices have
historically plunged.
Some commenters wrote that I
was crazy (as they often do) because it was perfectly obvious (in all
caps) that we were in a credit bubble. But no one addressed my concerns
that we could be in a gold bubble. In fact, come said that we’re
certainly not because of…well, the standard bullish arguments for gold.
Now
it looks like gold’s run may be coming to an end. Again, I’m not saying
it is, but look at what’s happening. As I writing this, the contract
for June gold is down to $892. That’s a huge drop just in the last two
weeks.
< |
