This is the first installment in a several part series on why gold is in a bubble.
I'm going to start with charts. Here's the thing, folks: When a stock explodes like this in only 300 trading days, it has only one direction to go, and that's back down.
Oh, that's the enron chart. My bad. The enron chart has nothing to do with the price of gold.
Enron's abruptly descending chart pattern would have something to do with the quotient 1/$GOLD -- i.e. how much gold a dollar buys -- if somehow the price of gold reflected the strength of the dollar, but we all know there's no such connection, since gold just goes for whatever price people are arbitrarily willing to pay for it. The two heavyweights Paul Krugman and Nouriel Roubini both said so.
An aside: it's actually pretty funny - gold, comic books, antique thimbles, the crazy stuff people like to collect these days! Good thing the government charges "collectible taxes" on GLD - at least 1/3 of the profit people make on this crazy stuff can go to better uses, like keeping our banking system strong and healthy.
Remember, with these matters it's important to keep a strong historical perspective. Maybe you've heard the saying "If we don't learn from history, we're condemned to repeat it." So let's look at goods that have matched gold's parabolic move this decade. How about the tractor?
Look how parabolically tractor sales shot up over a few decades! And we all know how that ended. The graph only goes to 1980, but I didn't bother checking the actual data, because I'm sure the "tractors sold" number is now around 1000 or so. That's just how bubbles play out, "returning to the mean" as the sophisticated economists have wisely told us. But none are so blind as those who will not see.
Note: the graph also has "horses and mules" on it, which unfortunately I couldn't remove. Not sure why they put that on the graph. What do horses and mules have to do with tractors? And what could horses and mules have to do with the dollar bill? Anyway, please just ignore that aspect of the chart.