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Are Gold and Silver in bubble?-Quick Name Three Mining Stocks

In this interview they discuss whether gold and silver are in a bubble and point out that for something to be in a bubble its not just the price that has to be high but it has to be over bought.

They note that if gold and silver were in a bubble the average persone would own and know all the silver and gold mining stocks

Silver and gold remain under owned as a percentage of investible assets

Take a quick poll-among your colleagues and see if they own or know any mining stocks.

During the Internet bubble it wasn't hard to find people who owned internet stocks or to get tips on internet stocks.

http://www.youtube.com/watch?v=QwoFRy-_KQA&feature=plcp



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Is Gold in a bubble-? analysis

New Financial Strategy

Very good point about the degree of gold ownership, rather than price alone, as an indicator of a bubble.

The establishment will do everything in its power to discredit gold/silver as investments, because it knows that investing in gold/silver is a vote of no confidence in the fiat dollar.

Besides Peter Schiff, any tips on good places to invest? Right now all of my money is invested fairly conventionally with Vanguard. My finances do not reflect my belief in a coming U.S. crash at all; I am far from crash-proofed.

"Yesterday we obeyed kings and bent our necks before emperors, but today we kneel only to truth." - Kahlil Gibran

goldsilver.com does a good job curating news stories

about gold and silver

as does goldmoney.com

and the newsletter from casey research gold and silver daily
http://www.caseyresearch.com/

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That's a very weak argument

The smaller the market, the less widespread the interest has to be in order to create a bubble. Trying to extrapolate from things that were true about a bubble that affected the entire stock market, to concluding that those things must be true of every bubble, is bad logic. And counter-examples aren't hard to find.

How many people knew about uranium mines during the uranium price bubble?
http://en.wikipedia.org/wiki/Uranium_bubble_of_2007

Did you hear any cab drivers asking how they could buy rhodium miners in 2008?

How many people do you know who could name three large rice farming corporations in 2008 when the price quadrupled?

Etc.

That doesn't prove that gold *is* in a bubble. The point is just that the argument is weak. On the other hand, the guy probably wouldn't be using weak arguments to support his view if he had strong arguments.

Another sign of a bubble is when people line up outside

gold dealer shops to buy.
It may not be proof of a bubble but again its anecdotal evidence and yes there may be a bubble in rhodium with nobody lined up out side the rhodium shops

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the gold and silver markets are worth TRILLIONS

include the investible bullion and miners and it dwarves the tiny rhodium market you site

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But did you miss the real point there?

Here's the argument being made:
(1)When the stock market was in a bubble with the dot com boom, it seemed like everyone in America was excited about investing in tech stocks.
(2)Therefore, if there were a bubble in some other market, it would seem like everyone in America was excited about investing in that market.
(3) If there were a bubble in gold, then it would seem like everyone in America was excited about investing in gold.
(4) If there were that much excitement about investing in gold, then people would also be excited about gold miners.
(5) If people were excited about gold miners, they'd be able to name at least three.
(6) Most people can't name three mining stocks.
(7) Therefore, gold is not in a bubble.

It's a bogus argument. Step 2 is an unjustified generalization, and furthermore, it's a generalization with numerous counter-examples. That means it's a false statement. That means the argument falls apart before it even gets started.

As for the gold market being worth billions ... is that the GATA number? Correct me if I'm wrong, but to get that you have to count all of the intra-day paper shuffling, and there's a lot of it. If you do the same to the stock market, counting all the trades held for even fleetingly short times, you get a much bigger number. If you look at the total market cap of the stock market, and a comparable figure for gold (total outstanding contracts, miner stock market cap) for gold even though we all know that the number of contracts far exceeds the actual volume of physical gold involved, you'll get a similarly lopsided comparison.

If the guy in the video had a strong argument to make, he would have made it. Him having to fall back to a claim about people not knowing the names of mining stocks smells kind of desperate to me.

When gold is in a bubble, there will be sufficiently widespread enthusiasm about it that you can even find something like a *real estate* podcast that's diverted to talk about gold prices, and the person talking about it will have as shaky a grasp of the subject matter as the dot com investors who thought Cisco was a food service company.

The Gold market includes:

the gold etfs (GLD, PHYS, SGOL=billions),

the gold miners (ex:Newmont $27 billion,Yamana -14 billion market cap)

bullion sold on the CME,

bullion sold from the US mint (hundreds of millions)

bullion traded and held by sovereigns (trillions)

This market IS massive but represents only a small percentage of the dollars traded compared to the overall stock market.

I think the "gold is not in a bubble because it is not front of mind for most investors" is not empirical evidence of gold not being in a bubble but anecdotal.

Because the gold market is very large, unlike virtual non existent markets like rhodium, interest would show up if there were a mania.
That interest has not yet developed.

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LIBERTY2ME's picture

so.....what are the 3 mining

so.....what are the 3 mining stocks?

the point was in a bubble

anyone could name at least three mining stocks
The general public today cant name one.
When the cab driver knows a dozen miners and knows whether they are junior or senior miners, its time to sell
We are a long way from that.

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fireant's picture

Ain't enough people saying,

"DAMN I wish I'd bought some".

Undo what Wilson did

Yes and that is what makes some people think its in a bubble

just because the price has gone up.
There will be plenty of people in two years saying the same thing about silver and gold

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Most bubbles are characterized by a sharp

uptick that lasts at the most a few years.

The housing and internet bubble didn't make it to five years.

Gold has gone up steadily for 12 years and silver has not reached its 1980 high-hardly a bubble.

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I don't think there is a bubble

Real world evidence is all the places now hiring kids and retired people to stand outside a strip mall holding up signs that say "WE BUY GOLD and SILVER"

People that are paying attention know that the entire global economy is being propped up by fiat currencies. Precious metals and other material items are the only way to protect your wealth at this point in history.

And I would keep less than 10% in mining stocks (if that much)...I'd keep the physical metals in a safe protected by a double barrel shotgun.

I've come across quite a few articles recently that indicate some of these mining companies are not even mining any metals...they just keep digging and selling worthless shares. I'm not sure how to figure out who to trust when it comes to dealing with stock brokers anymore. Many of the brokers are being fed lies by their corporate leaders and their bosses. They won't know they have lied to you until the mining company goes tits up.

Correct, the buzz is people BUYING gold

those commercials are designed to wrest gold from people hands as they know it will go up.

Re the miners you are also correct-some of them are probably worthless BUT their stock prices reflect that they are not producing anything as they are penny stocks.

In a bubble barrens mines would trade much higher and the real mines would be hundreds of dollars a share post split.

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Even if GOLD was in a (its not)

then Silver should be trading at a 16/1 ratio and its not its trading at 50/1
If silver were trading 16/1 as the historic average, it would be trading at around $110 an ounce

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Or ...

The silver/gold ratio is near an all-time low, and it could revert to historical means if the price of silver rose sharply. But it could also revert to historical means if the price of gold dropped.

By the way, did you know the copper/gold ratio is near an all-time low, too? http://pricedingold.com/copper/ Both silver and copper could revert to historical norms if both of those rose sharply. Or, both would revert to historical norms if gold fell.

Cotton is another commodity that, relative to gold, is near an all-time low. http://pricedingold.com/cotton/ Reversion to the historical norm could be achieved by silver, copper and cotton all rising dramatically. Or, by gold falling.

Wheat is another commodity that, relative to gold, is near an all-time low. http://pricedingold.com/wheat/ Reversion to the historical norms could be achived if silver, copper, cotton and wheat all rose dramatically. Or, if gold fell.

And more commodities could be added to the list that, relative to gold, are at or near historical lows. Reversion to the historical ratios could be achieved if *all* of them rose sharply. But reversion to historical ratios would also be achieved if just one commodity, gold, fell sharply.

Make of it what you will, but in terms of commodity pricing "one of these things is not like the others" in terms of historical ratios of commodity prices.

Silver is still below its 1980 high of $50 per ounce

THAT should tell you its not in a bubble

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The list is missing a lot of mid tier silver

miners like first magestic and endeavor silver

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They are the real money printers!

Looking for the Ron Paul mining portfolio
Barron's featured it last year

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