Gold (Stage 2 & Why)

This should be renamed the smart, the scared and the dumb. It would be naive to just keep going pro-gold all the way. I always do an anti-gold research at the same time. Many people are as anti-gold as those pro-gold. However their reasons are unfounded, more or less based on fear.
Fear profits no one, but fear itself. Lets recap an investment boom stage 1 & 2.

In stage one : Prices have gradually begun to rise, but not sufficiently enough for most people (including professionals) to take an interest. Only a few are making profits, the media doesn't care much.

In stage two: The mentality of most people is 'the market has gone too far too quickly'. The media has some references to the investment boom, some are proponents, others are opponents and demonizes that investment class.

This is why i say it is in stage 2. I will prove it to the best of my ability using not only the media, but world events as well as charts.

My analysis and response is in red color.

How the Opponent Media of Gold sees it:


Omg, i cannot believe CNN money actually said that. Bubbles are the Perfect time to make money, in times of crisis, the wealth transfer from the poor to the rich, the unsuspecting to the prepared is tremendous. The only great event other then a crisis/bubble is striking the lottery.

http://money.cnn.com/2011/01/10/pf/investing/investing_in_gold.moneymag/index.htm Excepts from CNN money: 'Unlike a bond, gold doesn't promise to pay you back with interest; unlike a stock, it doesn't have any hope of generating earnings over time. If gold were a house, it would be one you couldn't live in or collect rent from.'

True bond gives dividends, but many of these AAA bonds turn out to be junk. Remember the housing crisis of 2008. People don't really learn. Gold doesn't pay back interest, so? The recent capital gains from gold over time trumps any interest in the market as of yet. The time for bonds is over, there will be a time for bonds, it is not now!

'Right now, though, there's no sign that inflation is about to rear up anytime soon. For all the Fed's efforts to inject money into the system, the folks who have it -- banks, mostly -- have been reluctant to do much besides sit on it, leaving too few dollars chasing too many goods.'

CNN money has its head buried in a hole. Prices of items, goods and everyday products are slowly going over the roof. No sign of inflation rearing up? They must be living in the twilight zone.

Event a major media like CNN money is naive, how much can you trust mainstream media to give you a proper financial outlook?

Lets look at a recent statement by the Federal Reserve

'WASHINGTON, Feb 28 (Reuters) - A top U.S. Federal Reserve official said on Monday the U.S. economy should do well in 2011 and that oil prices rising on tensions in the Middle East are not currently a drag on the recovery. "We're in very good shape for 2011, the only wild card now is the Middle East." St. Louis Federal Reserve President James Bullard said on CNBC.' http://www.cnbc.com/id/41825136

What i like about the Fed's statements is that to see the truth you just need to turn their words 180 degrees around. Oil prices are not a drag on the recovery? Are you sure? Thats fed speak for saying a jobless recovery is still a recovery! The economy should do well in 2011? Which Economy? Mars?



I have analysed quite a few bubbles in the past, from the south-sea bubble to the dot-com bubble. We are long past stage 1, we can't go back. Prices are going up quite quite significantly now.

Best Case Scenario: Gold hasn't seen a bubble yet: It is just naturally revaluing itself to all the credit and currency floating around the world.

Worse Case Scenario: Gold is a bubble: We are at mid stage 2.

Conclusion: Whether it is a bubble or revaluing itself, its time to make money.


Gold is at 1420 USD/Oz. Up 10 dollars from 1 day ago. Have you bought gold yet? :)