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Wednesday, September 15, 2010

George Soros Clueless on Gold and "Ultimate Bubble"

George Soros seems to be clueless on gold and his obsession with it being the "ultimate bubble."

Soros doesn't seem to understand the reason there's support under gold and why that will continue for a long time.

He said to Reuters, “I called gold the ultimate bubble which means it may go higher but it’s certainly not safe and it’s not going to last forever,” although reluctantly admitting it's the only bull market at this time.

One reason Soros asserts this is he's big government socialist, and has out-of-the-mainstream views on politics and life.

Gold interferes with his worldview in that regard, and even though he has millions invested in gold, continues to hammer at it as if it's poised to plunge at any time.

There's no problem with Soros saying gold is an ultimate bubble, as someday in the far future that will eventually play out, especially when investors and the average person on the street all pour their money into it without knowing why, and far past the reason it is going up at this time.

That's the overall practice of fast-moving stocks and bull markets of any kind throughout history.

Where he's completely wrong is in he says gold isn't safe. Gold is safe, but it of course, like anything else, depends on how someone is investing in it, and the degree of overall exposure of their overall portfolio.

The price of gold is going up because of economic weakness and disastrous policies and practices of central banks and governments around the world.

And with the recession continuing on, or at minimum the global economy slowing down significantly, quantitative easing is ready to begin again, which will drive up the price of gold even more.

Of course it's not going to last forever, as Soros says, but that's obvious.

But that's like saying if you live in certain parts of California you're going to experience an earthquake sometime.

Everyone knows that, but you simply need to be prepared for that inevitable moment and respond accordingly. You don't stop living and life because it may happen.

Danger can come anywhere and any time, and safety is always an issue, even when traveling to a neighborhood store.

So to suggest gold isn't safe is like saying living in California isn't safe. What's the point?

As long as the fundamental reasons for the price of gold continuing to rise remain in place, gold prices will continue to rise. It's as simple as that.

when the macroeconomic climate changes, then we all need to remain vigilant with our gold investments.

Gold isn't even close to being in a bubble at this time, as nothing in the global economy has changed to make it be a concern. It will eventually happen, but that is probably a number of years away.

Until governments stop the printing presses and their stimulus plans, gold will continue its upward ride.

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