I have written several times for gold seek.com about the relationship of Gold and silver prices to other real things.
Food, energy, homes, even 1st class stamps have a long term, floating, deflationary, price relationship to real money.
However, Today I wish to point out a virtual relationship that "Metalica" (aka: gold) has to time.
As gold hits $1300 today for the first time ever, it’s a good moment to look at the speed its crossing round number price barriers, in the same way the Dow Jones average, (likely) left 1000 for good back when Reagan was president.
Since the 911 "event":
Gold
Crossed $300 on 2/8/02
" $400 on 12/1/03
" $500 on 12/2/05
" $600 on 4/18/06
" $700 on 9/7/07
" $800 on 11/5/07
" $900 on 1/14/08
" $1000 on 9/8/09
" $1100 on 11/9/09
" $1200 on 5/7/2010
" $1300 today 9/24/10
Of course each $100 round number is a lower percentage gain, and yes some day gold will surely move $100 in a day. However, each $100 mark has an important emotional effect on today’s investing public and wall street, exactly as the DOW does when it crosses a new 1000 mark.
Unfortunately, for investing public (and most of alleged investment
advisors) Gold’s current speed is a painful reminder of just how wrong they have been since its was under $300. With the DOW lower now than it was near 9/11 when investors could of bought gold near $300, its easy to understand why gold generates such anger and frustration among those who have been dead wrong about it for so long.
However, as time marches on, new $100 marks are hit in gold, more bulls join the stampede, more market commentators channel Peter Schiff, Max Keiser, and Alex Jones on how high is up predictions of precious metals price potential.
What I am trying to tell you, having watched bubbles develop in markets over 31 years is that sooner or later, (and my money is on sooner) the general public is going to latch onto gold and silver the way people used to brag about how much dot com stock they own in 1998.
That could be years from now, and hot markets always seem to overshoot to nutso levels. My own sign of the top will be when most local mini-market gas stations have a 1 gram bar gold/silver vending machine or will sell you metalica grams over the counter like a pack of cigs.
When that moment arrives, how much gold or silver you have accumulated to sell into any bubble top will matter much more than what prices you got in at.
Could the Federal reserve sober up before that? Could Ron Paul end the fed's fiat money before a hyperinflationary crisis erupts?
Could America abandon its FFIRE economy leadership (Fashion, Finance, Insurance, real estate) that’s killing us and replace it with a domestic RAMBO (Repair, Alt energy, Manufacture, Barter, Organic) economic leadership?
In America all things are always possible. However, I see no economic reform likely that prevents a gold bubble or hyperinflation before a real crisis occurs or monkeys fly, whichever occurs first.
When will a hyperinflationary gold bubble come to pass? I don’t know, you don’t know, Schiff, Keiser, and Jones don’t know.
I think Ed Hart, from back in the day on FNN, (before it became CNBC) had the timing of market tops right as he often said: "We will know in the fullness of time".
Michael "Woody" O’brien ChFC
mwoodyo@hushmail.com
