Note: This article was written on May 28, 2010 and is an example of a Martenson Report available to enrolled members, albeit a relatively short one. My service to enrolled members can be likened to an information scout who provides thoughtful analysis of current data while always remaining clear about the difference between facts, opinions, and beliefs.
- Asking whether gold is in a bubble or a bull/bear market misses the point.
- Better questions to ask involve fiat money management, government responses, and financial market risk.
- Gold is not in a bull market; rather, faith in our decision-makers is in a bear market.
- Trust is hard to come by these days.
- As for whether or not to buy gold, there are a number of factors to consider.
I’d like to clarify my views on gold, because I approach this topic from a unique perspective that I think has value.
For most, the idea of investing, or even speculating, is a matter of placing one’s money somewhere with the anticipation of getting more money back out at a later date. Naturally, the footnote to this expectation reads, “…assuming money is worth the same.” In this idea of investing, ‘more money’ is assumed to be synonymous with ‘greater purchasing power,’ because devalued money may represent a significant loss. The shifting target in this story since 1971 has been the untethered value of the currency itself.
For many investors, it has been a useful frame of reference to define various asset classes and markets in terms of being either “bull” or “bear” markets, where prices for investments have risen or fallen over some period of time, respectively.
Sometimes, when a bull market ramps out of control and then crashes, it is said to have been in a “bubble.”
Recently, the WSJ asked the question of whether or not gold is in a bubble, which is an important distinction for many investors, because if the answer is “yes,” then the next question is, “So when will it crash?”