The yeller dog appears to be in the final stage of bubbledom- impossible to say where it stops, but time is short IMO.
The gold chart is looking very familiar. We've seen this movie before - The Nasdung in '99-'00,
Real Estate values in certain bubbledoms recently,
and of course, crude oil, less than 2 years ago.
Comparing gold to dollars is just wrong. The dollar doesn't have any meaningful value long term.
For a fair view- compare it to other commodities, and not just one, like oil, which can gyrate pretty wildly.
Compared to the CRB index, which has been around for some time, we get an idea of how
overvalued the yeller dog may be..
In 1980, Gold was undoubtledly in a bubble, and it topped out just north of $800. While commodities
were also rising, they weren't keeping up with the galloping yeller dog.
The gold/CRB ratio peaked at 3.0, and the gold bubble quickly deflated, losing 63%
against paper dollars in just 2 years time.
In February, 2009, the Gold/CRB ratio peaked at around 5.0, 67% higher than in 1980. Currently it is at 4.17.
While gold has continued bubbling, the gold/crb ratio has not again approached the high.
When it pops, I think you'll see gold trashed much worse than other commodities-
after all, most of them are much more useful in the real world..
TW |
