Westy, I don't know if Mish screwed your brain, but this is
not a deflationary picture, and gold will go to between
5K and 10K to reach parity with 1980 high, depending
on what monetary aggregate you choose. The recession
of the early 90-s was far more deflationary than this one.
Even then M2 just flattened. Now it keeps growing rapidly.
During bad times gold assumes monetary role and catches
up with the monetary expansion that took place in the past.
No, it does not do so smoothly. The gold market hates
riders and frequently crashes 10-20% from overbought contitions
to shake them off.
You can't put a price tag on gold easily, since it is
an asset that does not produce income. However, it is
also an asset that can be easily hoarded and can't be printed.
Since most can't put a fair price tag on gold, nobody can
really say if it is in a bubble or not. Many claimed oil was
in a bubble last year, and they got their pom poms out when
it finally crashed on global depression. Now it is back to
80, which is up 700% from 10, where it was in the 90-s.
If and when oil exceeds 150 and goes to 300, these
knuckleheads who called it a bubble will scratch their
collective heads. Never say never. |
