JasonC Comments

"Precious metals are just the latest speculative bubble in a crowded favorite asset - like tech stocks in the 90s, or real estate and oil in the decade following. They are the bubble de jour, and everyone always thinks that this time it is different and "his" bubble isn't a bubble and can go on forever. They never do. There is always some superficially plausible story why it can grow to the sky. They just never actually do."

"Suppose the price does go to $5,000 an ounce, or to $50,000, or to $500,000. Would that make owners of gold rich?

No. Nobody makes *money* in gold until they successfully *sell* their gold for more *money* than the *money* they originally paid for it. Quotation changes are not money. To be concrete about it, you can't buy a house with a quotational change. When you've turned your gold position into real assets that you would otherwise have had to pay money for, then you can talk about what you've made in gold.

50 million people can crowd into the gold trade at $1900 an ounce, maybe at 3 times that, who knows? But they all can't remotely get out at anything like that price.

Because you see, to get out somebody else has to want in. And oh, vice versa.

Gold is in its blow off phase, has been since the start of July. The thing to do in a blow off phase if you own the asset going into blow off is to sell it continually in small increments. This ensures you get an average price. If the market stays insane and rising, you get free houses and cars and whatever. Not a giant growing quotational bag of wind. But only if you sell the whole time. If you sell slower than the price is rising your position won't shrink - it just won't accelerate the scale of your bet like topsy at exactly the wrong time, either."

JasonC correctly called the blow-off in gold from July 2011.

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