Earlier in the year George Soros had mentioned gold was a bubble ready to burst, although he failed to include the idea that he had made a huge investment in gold interests, including SPDR Gold Trust (NYSE:GLD).
In a recent required 13F filing, Soros revealed that his Soros Fund Management had cut back on his position in SPDR Gold by 9.6 percent, probably from concerns over the high rise in price of the safe haven metal.
This is probably a mistake on Soros part, but we'll wait and see.
I think the thing that Soros misses is the regular guy on the street hasn't entered the gold bull market yet, and that should protect the upward movement in the gold prices from being a bubble.
A bubble usually occurs in any investment sector when those that don't understand the fundamentals of an investment finally decide to invest in it when it is already full priced.
This normally shoots the price of an investment up, when the support for it isn't there, ultimately creating a bubble. That's what happened in the housing market, as people continued to bid the price of homes up thinking there's no such thing as a ceiling on value.
It doesn't seem that gold has entered this phase at all yet, and even if it did, the fundamentals are there to justify it. There will of course be many corrections on the gold bull market journey, but that won't be a bubble.
Market conditions and the unprecedented spending of money and budget deficits ensure gold will continue rising in price for years to come, with the occasional correction along the way.
Eventually there will be a bubble in gold, just like anything else that has gained favor over a period of time before those that are clueless enter into the fray.
Gold is probably years away from that happening, and the economic conditions will ensure it won't be bursting for any time soon, and will continue on its upward climb.
Monday, May 17, 2010
George Soros' SPDR Gold (NYSE:GLD) Stake Lowered
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2 comments:
I have been reading recently that gold vending machines are now being installed in places of business.... okay; do you really need any more evidence of a financial mania? I suggest you pay very close attention to developments, because it may already be too late by the time you realize that Soros was right.
One other thing. A characteristic of manias is that everyone looks like an expert... even some guy writing in a no name blog who thinks he is a better trader than Soros. lol.
The "regular guy on the street" has no money to invest in gold and will never participate in creating a gold bubble.
While someone might invest 100% of their assets in a ladder of treasuries. Or their home. Or the stock market if they believed the buy and hold forever BS of mutual fund and money managers. No one in their right mind would put more then 5% in something as risky as gold. There will never be a gold bubble.
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