Historic gold price charts -- gold prices in dollars and euros
The new Bubble
Notice the 20 year gold line. From 1990 top 2005 investment in gold returned a flat return. Gold was generally a shit return and has only spiked some since 2006, with the full impact of the Bush years hitting global markets.
With the economic crisis currently there has been a rush to stability and gold is fairly safe. But what is starting to be a work here is a new bubble, a bubble being stoked by media figures like Glenn Beck. Glenn and other pushing the Tea Party have been recently exposed as also taking money for promoting gold.
Its this simple. There is a large population of people out there who are in economic trouble and are selling gold. Gold sales are very high right now as cash scrapped people cash in family gold all over the world.
So the supply of gold is up. Now the economic concerns alone are not going to insure that these people buying gold are not going to get killed. Companies, like Goldine which Beck is a paid spokesperson for, are going to want to promote the sale of Gold.
Bingo, suddenly you can see it. The right wing media and blogs like Drudge, Beck and Rush have an amazing opportunity right here, an opportunity they are using. A large part of the US population is white, dull, uneducated, and disgusted by the presence of a black President.
So the right wing media is pumping them with stories to promote Gold over other kinds of investment. Drudge reports every day the dollar goes down without reporting when it goes up. Gold prices are given over 7 years, with helpful "chart work" to show "if these trends continue", but when you look at the 20 year line you can see a clear bubble.
We go for stocks to housing to gold, and sadly the same kind of people are being exploited. But what is sad is we see how the white male Reagan working class is being piece by piece stripped of assets. In the 1990s they were going to get rich quick on emerging stocks and they bought massively in to the broader markets which have never fully recovered. When that collapsed the look for a more secure housing market, where they could get solid returns they assumed to be safe.
Now they are looking for basic survival. Gold is being presented to them as a potential place make a quick buck under the assumptions that US capitalism is about to die.
Sadly the outcome of this bubble is clear. The above chart is so familiar. Beck, Drudge and others are profiting by sending people to gold web sites and 1-800 numbers, but with prices so high these investors will be clobbered when the economy returns to normal conditions and global investors reduce gold purchase to invest in equities, especially when the banking sector resumes.