Letting Air Out Of the Gold Bubble Theory

Bill Fleckenstein MSN Money September 6, 2011

9/2/2011 3:32 PM ET

By Bill Fleckenstein, MSN Money

What the gold bears don't seem to realize is that, despite its big gains, the gold market can't be a bubble when almost everyone seems to think it's overpriced.

Bill Fleckenstein

By now, everyone understands that the stock market mania that culminated in the dot-com lunacy was a bubble. Although a not-insignificant number of us were able to identify it as such at the time, the vast majority of people in positions of power in the financial industry were fooled, as were the masses.

Likewise the housing bubble, which was even more obvious. In hindsight, the diagnosis is crystal clear, but those who were espousing that view in the moment were regarded with skepticism (if not scorn).

This is one of the characteristics of an actual bubble. Almost by definition, only a small group spots a bubble in real time and isn't seduced by the siren song. If you think about it, that makes some sense, because part of what drives the creation and growth of bubbles is the belief that you are not in one. Instead of being suspect, parabolic price appreciation gets rationalized away with statements like, "new economy," "this time, it's different" or "housing prices never go down."

More on whether the gold market is a bubble

Conversely, a widespread belief that steep price appreciation is unsustainable is a good sign that you are not in the midst of a bubble, since it is an argument against joining the action. Whereas during a bubble all you hear -- in the media, at parties or even from the bagger at the grocery store -- are the reasons you should jump in before it's too late.

The reason I bring all this up is because inane commentary about the gold market being a bubble continues almost daily, even despite last week's sharp correction. (Read last week's column on the correction, "Gold's fall: Slip or the start of slide?"

These arguments ought to be enough to convince reasonable people there's no such bubble. But perhaps it is even more compelling to look at who is trying to "warn" us about gold.

I have not said much on this topic, because the idea of a gold bubble now is so inaccurate it's not really worth a response (which doesn't mean it won't become a bubble -- it probably will). But it recently occurred to me that virtually no one who recognized the tech-stock and/or real-estate bubble now says that gold is a bubble. In fact, almost all of us who identified those bubbles long before they burst actually own gold, and have for quite a while.

It is really only the people who missed the previous two who now think gold is a bubble. They were painfully wrong in the past, so now they are determined to spot the "next" one.

In addition, of course, I suspect that none of them own any gold themselves. So not only did they go 0-for-2 on the prior bubbles, they have also missed out on as much as 600% of appreciation had they bought gold, either physically or through investments like the exchange-traded fund SPDR Gold Shares (GLD, news). That is a recipe for bias if I have ever seen one.

I really don't understand why the media hasn't figured out that connection and at least scratched its collective head enough to ask: Why is it that the people who have been so wrong in the past think gold is a bubble, and that the people who have been right think it isn't? But such is the nature of bull markets.

As one of my smart commodity trading friends remarked long ago, with gold you can be contrary and with the trend. Granted, gold is nowhere near the contrarian idea that it has been in the past; rather, it is starting to go mainstream. But that is also something that happens in bull markets.

I suspect that before this is all over, the number of anti-gold critiques will go down, instead of being a feature of one paper or another once a week at a minimum.

When doves fly

If anyone needed another reason to own gold, it was provided by comments from Charles Evans on Aug. 30. At the last meeting of the Federal Open Market Committee, the Federal Reserve governor said that he "wanted to do more" easing.

Evans suggested that the Fed might consider keeping interest rates low until unemployment fell to "a certain level, maybe 7.5%, maybe 7%," or until "inflation became tremendously unacceptable." In other words, he thinks the Fed should target unemployment, inflation or both. (For what it's worth, his views were buttressed later that day, when last month's FOMC minutes revealed that committee members had in fact discussed those very subjects.)

As for any concerns about rising prices, he also stated, "Inflationary pressures are not nearly as strong as a lot of people think." Lastly, he noted, "I really don't need to see a lot more data to understand that we haven't achieved escape velocity. We need to do better." Personally, I think he meant to say "more," not "better."

Any questions?

At the time of publication, Bill Fleckenstein owned gold and gold-related stocks.

This column is a synopsis of Bill Fleckenstein's daily column on his website, FleckensteinCapital.com, which he's been writing on the Internet since 1996. Click here to find Fleckenstein's most recent articles.

RELATED ARTICLESExchange-traded funds: List of ETFs & research - MSN MoneyAre ETFs a market menace? - exchange-traded funds - MSN MoneyETFs for conservative investors - fund investing - MSN MoneyStamps and 9 other oddball investments - wealth strategies - MSN Money5 reasons gold is headed for $3,000 - 2 - investing strategy - MSN ...An ETF portfolio for cheapskates - investing strategies - MSN MoneyVIDEO ON MSN MONEY/* /**/ var scp_UserRating=-1; down_arrow_hover= new Image(); down_arrow_hover.src = 'http://blu.stc.s-msn.com/br/scp/css/15/decoration/toolbar/rating/down_hover.gif'; down_arrow_normal= new Image(); down_arrow_normal.src = 'http://blu.stc.s-msn.com/br/scp/css/15/decoration/toolbar/rating/down_normal.gif'; up_arrow_hover= new Image(); up_arrow_hover.src = 'http://blu.stc.s-msn.com/br/scp/css/15/decoration/toolbar/rating/up_hover.gif'; up_arrow_normal= new Image(); up_arrow_normal.src = 'http://blu.stc.s-msn.com/br/scp/css/15/decoration/toolbar/rating/up_normal.gif'; var scp_thankyoutext = 'Thank you!'; var scp_thankyoualttext = 'You have voted on this'; var scp_votestext = '{0} votes'; var scp_votescount = 67; var scp_errmsg = 'Errors occured while saving your rating. Please try again later.'; var scp_yesvotes = 47; var scp_jsurl='MSNRRV2.aspx'; var scp_jsargs='rrct\x3doE0QuuCFWRgt\x252fxpt\x252fkHSJs57VE1CLazX0d\x252bTwJqkFcK89MWuX5chEU4wKztVXckuLKl5UtIRxFfjf3Rn3cpMw49ikytlSjS\x252fqEi0nSkVVcYxDBQu4yM3YvldgAJPRo7lUocPqv7XPJWYoYWn\x252bHy2x4\x252f2Dntq6cFHn9PlBmJGSAfi3syYVyMFwVSH6wolB4nkwlBxLAWZhRH2\x252fiovuFJiKg\x253d\x253d\x26values\x3dshFp7XlTQbexq2I491\x252fdUQ\x253d\x253d\x26rritemId\x3dTZsRd4pyoJ1qQ2wcthY8ui5vEgWF9rm2GKWBNOllAxYGmKPo29Hw6m3rLCy3PCIXxrDM7ikBQCSBwA5pEFnLww\x253d\x253d\x26rrpurl\x3dhttp\x253a\x252f\x252fmoney.msn.com\x252fexchange-traded-fund\x252fpopping-the-gold-bubble-theory-fleckenstein.aspx'; var scp_itemid = 'scp\x3abbcdiscussion\x3a7c5a95ad-fd96-489c-b010-759f54e1e44d'; function BinaryRatingToolBar(ratingValue){scpjs.socialToolbar._handleBinaryRating(ratingValue);} Recommend67 votes70% Rating: You recommend this30% Rating: You don't recommend this ToolBarUpdateRating('scp\x3abbcdiscussion\x3a7c5a95ad-fd96-489c-b010-759f54e1e44d','ratCntrlBinary'); jQuery.async('scp', function () { jQuery.scp.socialToolbar({"partnerId":"e70689f0-2848-458a-b8ae-965c0aac79c8","jsUrl":"http://us.social.s-msn.com/s/js/16.5/ue.min.js","enabled":true,"previewMode":false,"contentId":"t2dkfy4vcqnshg4sej50jywvb865ie23","boardId":"00000065-02a6-0000-0000-000000000000","threadId":"7c5a95ad-fd96-489c-b010-759f54e1e44d","urlParams":{"title":"","desc":"","image":"","url":"http://money.msn.com/exchange-traded-fund/popping-the-gold-bubble-theory-fleckenstein.aspx","s-url":"http://on-msn.com/o7P4su"},"timesShared":92,"shareCountUrlBase":"http://social.msn.com/boards","settingsCookieDomain":"msn.com","showMiniTb":true,"showRatings":true,"showEmail":true,"showPrint":true,"showIM":false,"imagesDir":"","printUrl":"","sharingSites":[{"id":"1","name":"Messenger","icon":"http://media.social.s-msn.com/images/blogs/Messenger.png","smallIcon":"http://media.social.s-msn.com/images/blogs/Messenger-s.png","urlTemplate":"http://profile.live.com/badge?url=%7Bs-url%7D"},{"id":"2","name":"Facebook","icon":"http://media.social.s-msn.com/images/blogs/Facebook.png","smallIcon":"http://media.social.s-msn.com/images/blogs/Facebook-s.png","urlTemplate":"http://www.facebook.com/share.php?u=%7Bs-url%7D&t=%7Btitle%7D"},{"id":"3","name":"Twitter","icon":"http://media.social.s-msn.com/images/blogs/twitter.png","smallIcon":"http://media.social.s-msn.com/images/blogs/twitter-s.png","urlTemplate":"http://twitter.com/home?status=%7Bs-intro%7D"},{"id":"4","name":"Digg","icon":"http://media.social.s-msn.com/images/blogs/digg.png","smallIcon":"http://media.social.s-msn.com/images/blogs/digg-s.png","urlTemplate":"http://digg.com/submit?partner=MSN&url=%7Bs-url%7D&title=%7Btitle%7D"},{"id":"6","name":"LinkedIn","icon":"http://media.social.s-msn.com/images/blogs/linkedin.png","smallIcon":"http://media.social.s-msn.com/images/blogs/linkedin-s.png","urlTemplate":"http://www.linkedin.com/shareArticle?mini=true&url=%7Burl%7D&title=%7Btitle%7D"},{"id":"7","name":"MySpace","icon":"http://media.social.s-msn.com/images/blogs/Myspace.png","smallIcon":"http://media.social.s-msn.com/images/blogs/Myspace-s.png","urlTemplate":"http://www.myspace.com/Modules/PostTo/Pages/?u=%7Bs-url%7D&t=%7Btitle%7D"},{"id":"8","name":"Google Bookmarks","icon":"http://media.social.s-msn.com/images/blogs/GoogleBookmarks.png","smallIcon":"http://media.social.s-msn.com/images/blogs/GoogleBookmarks-s.png","urlTemplate":"http://www.google.com/bookmarks/mark?op=add&bkmk=%7Bs-url%7D&title=%7Btitle%7D"}],"locale":"en-us","miniTbPositionRef":"ahead","strings":{"lc_rdcmnts":"Read comments","lc_addcmnt":"0","lc_rec":"Recommend","lc_eml":"Email","lc_shrintro":"I thought you would be interested in this: {0}","lc_im":"IM","lc_mor":"More","lc_ncmts":"{0}","lc_prt":"Print","lc_shr":"Share","lc_shrn":"Shared {0} times","lc_shrt":"Share","lc_vts":"{0} votes","lc_ivno":"You don\u0027t recommend this","lc_ivyes":"You recommend this","lc_yvno":"You didn\u0027t recommend this","lc_yvyes":"You recommended this","lc_ratingadded":"Thank you!","lc_ratingerr":"Could not add rating","lc_alrdyvote":"You have voted on this","lc_defml":"Email program","lc_hotml":"Hotmail","lc_gml":"Gmail","lc_yml":"Yahoo! Mail"},"omniAccount":"MSNPORTALSCP","ratingsControlId":"ratCntrlBinary","ratingsItemId":"scp:bbcdiscussion:7c5a95ad-fd96-489c-b010-759f54e1e44d","appUri":"http://social.msn.com/boards","pageUrl":"http://money.msn.com/exchange-traded-fund/popping-the-gold-bubble-theory-fleckenstein.aspx","ratingTags":["00120065-0000-0000-0000-000000000000","00000065-02a6-0000-0000-000000000000","ART"],"fblkShow":true,"fblkAppId":"","fblkRef":"","fblkTrkName":"","fblkTrkVal":"","twtShow":true,"twtTrkName":"","twtTrkVal":""}); }); /**/ 65CommentsNewestOldestBestWorstControversial1234 John (J Wisp) 5 minutes agoIn the long run, the best investment you can make is learning how to grow your own food. Live by your own means. Realistically, if it all goes to hell, gold will be just another heavy weight. And a sore temptation for someone to rob you. And if you are investing in gold that someone else has stored somewhere, give me a break! 0 0ReportSpamEdward F. Dijeau55 minutes ago

In 1933, you could buy a 2 bedroom 1200 Square foot home for $2,500 in Oakland California and gold was at $35.00 per ounce. Today that home sells for $165,000.00. The home costs 66 times today than it did in 1933. In 1933, an Electrician made $1.00 per hour or $40.00 per week. Today an Electrician makes $68.00 per hour in wages and benefits. If you relate Gold's Value to the Cost of living and wages you could gather, at 65 times what it was worth in 1933 would be reasonable $35.00 X 65 = $2,275.00 per ounce.

For years, Gold's Value was artificially kept low because it could be mined as a bi-product of copper and other mining operations for around $240.00 per ounce. This was "Easy Gold" without any real value being added for it's rarity. With only 10 billion ounces of gold currently held by people in Jewelry, Coins and Bullion, that is less than 1.5 ounces of gold, per person, on the planet. Real Net worth used to be in held Land and commodities such as Gold, Silver, diamonds and other gems. Supply and demand will keep the value high if other forms of investment, like Stocks , Bonds, Real-estate and savings account interest rates stay low. If we are entering a "Japan like contraction" and the dollar declines on the world market, then Gold, Silver and other commodities like OIL, copper, zinc etc. will continue to rise. No crystal ball here, just a little reason why the bubble may not be a bubble.

Part 2...Silver was $1.29 per ounce since 1892 until 1964 when it was allowed to float. It is a commodity that is used up and needs new fresh supplies. Using the same multiplier on Silver of 65, today silver would be reasonable at $80.00 per ounce. Not as much hording demand because of storage but it is used in Manufacturing, Electronics, pharmaceutical electrical industries because it conducts electricity 40% better than copper. The best Solar Panels use ultra fine Silver conductors in them because the can be smaller and have less resistance. Used in jewelry and coins, it could be a better long term investment than Gold at today's prices.

In 1933 Platinum was at $33.00 per ounce and Gold at $35.00. Gold was reset from $20.00 per ounce to $35.00 per ounce that year and all private Gold was confiscated with a $10,000 fine and/or 10 years in jail for non-complying hoarders except for Gold Coins minted before 1933.

2 2ReportSpamMADe In USA 19551 hour agoGOLD 1912.20- PLATINUM 1891.00 GOLD IS +83.10 . SSHHHHHH DON'T TELL ANYONE. 3 1ReportSpamTop Cat5201 hour ago

Maybe you cant eat gold, but you can take a one oz. gold coin or bar to your local coin shop or Pawn shop, and get enough money for it to eat at a lot of fine places for some time.

3 1ReportSpamred billy1 hour agoI heard all this silly talk in 1980. The dollar was getting devalued, the government is bankrupt, inflation is out of control, gold can only go up, blah blah blah. Same ol same ol. How that work out for ya? Total BS. You want to piss your money away on gold....go for it. When I meet someone who has made a fortune buying AND SELLING gold I will change my mind. I keep looking. Have found no one. 3 1ReportSpamJohn (J Wisp) 1 hour agoCan't eat gold no matter how long you cook it! 3 3ReportSpamMADe In USA 19551 hour ago 0 2ReportSpampapa tiger1 hour agoPsst, Pass it on, gold will be $2100 an ounce in 3 months. Thats how it goes up in price. You better get on the band wagon before it quits going up in value. That's how people get cought up in a bubble, and the sellers sell it and take their profits to government bonds. After the price stabilizes again they buy back into gold and it starts over. It's how all Market funds work. Buy low, sell high. Get in early, leave early, don't stay late. Take your profits. don't wait. Now profit is spelt, computer speed of transaction, beat the other guy with speed. You and I can't use that kind of speed. It's their parachute. Put in your buy order and their sell order beats everyone else. Put in your sell order and their sell order beats you and your price falls like a rock until it sells very low, and they buy it back before you can digest how much money you have lost. 2 1ReportSpamMADe In USA 19552 hours agoCheck out these symbols, -gc and -pl . Now that is weird.But still people don't believe in gold as a good investment. 1 0ReportSpampapa tiger2 hours agoIf you had purchased $100,000 in gold in the early 80's it would have increased in value and you would be very wealthy today. You would have spent a lot storeing it, or robbed and shot. You would also be a whole lot older in age. Gold is for big boys. Diversification is still the best hedge against changes in Economic conditions. If you are in a hurry to spend all your money soon enjoy Cancun. Investing in precious metals now would make you a homelessness wreck in 6 months. 1 1ReportSpamSteven442 hours agoI'll give you credit for a catchy article title but you certainly didn't pop the gold bubble theory. Soros thinks gold is the "ultimate bubble". He spotted both the housing bubble and the dot com bubble early as well. The fact that gold has risen so dramatically in price doesn't necessarily mean gold is in a bubble, however, it certainly doesn't mean that it isn't either. You gave no real reasons why the price is justified at these incredibly high levels. It's a fear play that the world is coming to an end and the US will just print money like there is no tomorrow. Google the phrase "land of sheep gold" and read some counter arguments that are much more compelling. 3 1ReportSpamSomeone3 hours agoI am a 30-years old lady, mature and beautiful. My boyfriend is 12 years older than me. We met at an age gap dating site called---Ag éM'in gl é . ℃○M--.the premiere online community for men & women who don't rule out relationships with people that are significantly older or younger than themselves. Feel comfortable with the possibility of starting an age-gap relationship in a community where people think just like you. Leave behind the embarrassment and annoyance of "everything to everyone" dating sites. It is a focused community that goes beyond dating. With blogs, chat, instant messaging, and many other social networking features, seeks to evolve the concept of meeting people online.Yep, we see plenty of that, hell in the last 1-2 months alone milk went up from about $3.70 at the grocery store to about $4.10. And milk is only one example, of what customers are seeing in terms of stores that sell the basics. Hell, I remember the days (not too, too many years ago) when a bag of Doridos (OK, more a snack food then a basic) was like $2.50 a bag, now it's like $4.00. Cheese has also gone up, by more then 1-2% looking at the last couple months alone... 1 5ReportSpamerwi4184 hours agoThe fact that gold has gone up does not mean the dollar is worth less. The dollar now buys more computing, more and better software, more house, more productivity than a dollar spent at anytime in the last 20 years. Remember the old Apple II computer?I have always invested in gold with the thought of selling it at a higher price and without all the rationalizations that are given for owning. I remember. I remember well how Spain and Portugal literally raped the new world of its gold and silver. In the process, millions of Aztecs, Incas, Mayans, and others lost their lives. In the end, hoarding all that gold and silver didn't benefit Spain and Portugal one bit. The empires of the two great gold and silver hoarding countries collapsed almost exactly at the point when the had the largest hoard. 1 2ReportSpamboomerscoutofamerica4 hours agoGold should have been bought 10 years ago. Then there was the potential of its increasing six-fold. The AU Bull is already old for a bull. Why would you want to buy now? For a double? What are the odds? What are the odds of your losing 40-60% of your investment in a couple of years? Let's face it, the easy money has already been made, and if you invest in gold now you are taking on way too much risk for the reward available. Sure it may pop. Big whoop. It also may drop. Ker-plop. Stand back if it does, cuz it will go down fast. Gravity, you know. We're not talking about the late adopters skeedaddling here. We're talking about big increases in margin, central bank selling, or big miner hedging--all those have been done before and they take gold down fast and for a long time. Caveat emptor. 3 2ReportSpameric scott4 hours agoThe price of gold going up does not mean that it's Value has gone up. It means that our Dollar is Worth-Le$$. 4 3ReportSpamcatmancool6 hours ago

Wow, who would have thought that BF's simple article pondering whether gold was in a bubble or not would draw such spurn, hatred, and anger? You would have thought he was trying to argue that the South really won the American Civil War or something - Simply amazing.Let me first address a few of the hypocracies that several posters have made here.

1. That gold has no inherent value as it can not be eaten, worn, drank or whatever basic need you choose to focus on. Its all BS unless you are trying to say that only tangible barter items, serving a human basic need, have any inherent value.In which case you are really arguing tha the entire concept of trade, and money itself is irrelevant. Human culture and our modern technological world was built on trade using some sort of money as the trade medium. So, I guess you better head for the hills, bar the door, and be on the look-out for the enemy. Which brings us to the second point.

2. That in cases of disaster or economic failure - guns and violence will rule. I suggest you may have watched one too many Mad Max type movies. Or perhaps you are just a criminal or thug who doesn't have the guts to do it now, because there is society, laws, and police to stop you. Something for you to think about - do you really want to go hide in the woods or on a mountain, seeing every stranger that comes up the path as an enemy to kill? That's no life - its just an animalistic existance. If there is any hope for society after such a disaster, it will require a society of caring and trusting individuals using some sort of medium of exchange, which brings us to my third point.

3. Gold is the one instrument of exchange that has repeatedly withstood the test of history. Come hell or highwater, war or famine, fire or draught - societies have always gone to gold to trade their way to a higher level of civilization. And, while a barrel of oil, bushel of wheat, and a bolt of cotton will no doubt have value in a post apocalyptic world - it will most probably be gold that serves as the main basis of external trade.

4. Finally, gold's ultimate appeal is to those who merely wish to save securely. Banks may fail, stocks may crash, and governments may default, but gold is something REAL that will remain long after the other stuff has faded into the past.... Every see Roman stock cert? how about a Babylonian land deed? okay what about an amphora of oil from Corinth? Yet, gold coins from all these formerly great nations still exist today.

8 3ReportSpamNuad ormrac7 hours ago

There are most definite reasons to look at putting gold into one's investment portfolio, and looked at that way, it also is indicative of what people's thinking/concerns are which is driving them to want more gold. Hedge against inflation, a de-valueing dollar? Yep, we see plenty of that, hell in the last 1-2 months alone milk went up from about $3.70 at the grocery store to about $4.10. And milk is only one example, of what customers are seeing in terms of stores that sell the basics. Hell, I remember the days (not too, too many years ago) when a bag of Doridos (OK, more a snack food then a basic) was like $2.50 a bag, now it's like $4.00. Cheese has also gone up, by more then 1-2% looking at the last couple months alone...

Gasoline prices, holy hell, we could have a whole discussion over what gas prices had done over the last several years, and the roller coaster ride it took, hell if we went back a decade, I could find $0.97/gal, but today :o

Back to the store, look at the price of meat, over the past several years; we're honestly at the place again where going to a cheap resturant might be cheaper then buying all your own groceries (unless you eat ramen, spagheti, or the like every night), get a drink, something on the side, and then have to pay for the dish detergent to clean those dishes, and the electricity/gas used by the stove/oven to cook the thing. That is of course buying it retail, vs well at least a business doesn't have to buy it in small quantity, at the retail price;has their own suppliers who sell in bulk... Everytime I step in a grocery store, it's one surprise after another.

And when people are seeing this on the basics, there's reason to think about inflation. People get nervious about inflation, they're going to want a hedge, which is exactly where investors would say gold would come into play in one's portfolio. The more concerned about inflation people become, the more demand for something which is deemed to be holding value (vs. a form of fiat currency which is losing it's value, aka inflation and the several programs of quantitative easing we've had), comes into play. Outside comodities, what is there? The stock market? Tends to be higher risk, and people are nervious of risk right now, in this climate. Money? Well that's what's losing it's value. And yet when the US had it's credit rating lowered by S&P, people did buy more T bonds, the rationale given was that people felt that they were a safter bet then stocks.

That's the problem with simply calling it a bubble, or suggesting everyone's being suckered in. What's driving it up isn't some factoid getting out there saying "buy gold, it's the new craze"; but rather concerns over inflation and the devalueing dollar. It's also a matter of consumer confidence, or the lack thereof. Let me put it this way, when China is considering de-investing in USD to some degree, and putting more of their investment into gold, is it because China is being suckered into some kind of bubble? Or is it because they're becomming nervious, that perhaps the US dollar isn't quite as good an investment as it once was, for various market reasons. Are they going to gold, simply because it's gold, or is it more feeling a need to get away from the alternatives because of their confidence/or lack thereof in the rationale for continueing to invest in the alternative....

And yes, how many believe it is over-priced or not, is side stepping the issue. The price (albeit against the backdrop of everything else, including inflation in general, and how strong or weak the dollar is, over time) is what lies at the heart of the issue....

4 3ReportSpambubble trouble7 hours agoDoes anyone know where I can buy contracts for tulip bulbs? I think tulips are undervalued and will be worth a lot of money again someday. 7 2ReportSpamqwerty237 hours ago

I thought about this article some more, and realized one simple thing. All this bubble/no-bubble debate comes about from one simple question, which is:

How do you justify the price of _________? (Think about how this applied to the housing bubble, the dot com bubble, and to gold. Conversely, think about how it applies to a solid company's stock like Apple).

Bill Fleckenstein missed this point entirely. A bubble is defined by something that is selling for far above it's real value. So, Bill needs to discuss the price of gold. What does he think the real value of gold is? Why is it worth at least $1900 per oz? How high does he think it wil go? At what price will he sell his gold holdings? What economic circumstances will cause him to sell his gold?

This would get to the heart of the issue, but he side-stepped this entirely. In the end, it all comes down to price.

9 2ReportSpamRobert Muzingo7 hours agoIt's harder ,for a camel,to thread the eye of a needle, Than it is to take all your Gold to Heaven. 3 3ReportSpam1234 Add a commentReportPlease help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.CategoriesSpamChild pornography or exploitationProfanity, vulgarity or obscenityCopyright infringementHarassment or threatThreats of suicideOtherAdditional comments(optional) 100 character limitAre you sure you want to delete this comment?jQuery.async('scp', function () { jQuery.scp.comments({"partnerId":"e70689f0-2848-458a-b8ae-965c0aac79c8","jsUrl":"http://us.social.s-msn.com/s/js/16.5/ue.min.js","strings":{"lc_shw":"true","lc_dtf":"%M/dd/yyyy %h:mm tt","lc_dtf2":"ddd %h:mm tt","lc_gmt":"-4","lc_erg":"Comments are currently unavailable. Try again later.","lc_det":"Comments are unavailable on this page.",