Individuals are starting to talk about a gold bubble burst. Most people thought gold was the safest bet when it came to financial investment within the global financial crisis. The global financial crisis is ending which means the gold bubble might burst, although it rose since October 2008. There won’t be any kind of demand for gold if the investment doesn’t have to be made anymore. Gold was at record high on June 21 when it was at $ 1,266.50 while it has now dropped to $ 1,185.
Knowing when a bursting gold bubble will happen
It might be a sign of the gold bubble burst the gold prices are so unsteady. Not even India or China are that interested in gold anymore as outlined by Brian Renzy from Seeking Alpha. Those who purchase gold expect it will always increase in price. This is why people invested their lives into gold during the global financial crisis. The only reason gold is valuable is because investors have believed it is valuable. If a gold bubble burst would to happen, that would all change.
Markets overreact to European credit crisis
Ron Acoba at Daily Markets explains the credit crisis in Europe seemed to be devastating to the global economy which is part of why the gold bubble burst may happen. . The gold bubble will soon “end in tears” with a huge decline in gold prices, reports Renzy. In 1980, the exact same thing happened when gold peaked at $ 850 an ounce. That is $ 2,300 when adjusted for the inflation that has happened since then. Then it went down drastically by 1999 to $ 253.
Not as safe as thought
The gold bubble is precariously large as millions of people are buying gold. Gold is even endorsed by celebrities. Putting money into gold is encouraged by Glenn Beck who believes gold is the best way to invest with the economy as it is. Beating Broke wonders what will happen if (when?) the economy recovers. Gold buyers can be sad to see their investment of $ 1,100 or $ 1,200 an ounce change to be $ 800 or $ 900 an ounce instead. If these investors lose 30 percent of their savings or portfolio, the gold bubble will burst. The price of gold will drop even further as individuals rush to sell off their holdings. Those who really believe in gold will lose more than anybody else.
Daily Markets
dailymarkets.com/forex/2010/07/28/did-the-gold-bubble-just-pop/
Beating Broke
beatingbroke.com/is-gold-the-next-bubble/
