June 28, 2010
This is the problem with calling bubbles: You can know that you’re (probably in one) and still have no idea which way to bet.
To wit: Top Macquarie interest rate strategist Rory Robertson is out with a call that gold is a bubble. Ok, so then what? He doesn’t know.
But Robertson argues that most people now betting on gold going up are doing so just because gold has gone up – the very stuff of bubbles.¬† Rather than worrying about US Treasuries or Australian house prices (he doesn’t see a bubble in either of those assets for fundamental reasons), punters should be sceptical of gold around US$1,250 per ounce, almost quintuple its early 2001 price of US$260.
”It is the very nature of bubbles that drives prices well beyond what most observers see as reasonable. Accordingly, the price of gold over time could jump to multiples of its current elevated price, before reversing,” Robertson admits in a ”Bubble Watch” report to clients.
Good luck with that.
This article was posted: Monday, June 28, 2010 at 10:16 am