During the oil price boom, forecasters were predicting levels of $250 a barrel. It topped at $140 after piercing the psychologically important $100, and then fell heavily to bounce at $40. Gold pierced the $1000 level on its second attempt, after rising from $350 and then has flown over $1300. The shape of the rise since 2001 is the dreaded parabola. The more the price rises, the more and the faster it rises. A parabola is the shape of a herd driven price rise. The final thrust is when the public joins in, backing the trend which the professionals started.
Once the herd turns, the charge south can be devastating.
At least with oil, people in the real world had to keep buying the stuff. Gold is simply being hoarded. Jewelry sales worldwide are collapsing, and scrap is being traded at a significant discount to the market price. The moment the market will break is when the bulls get nervous. That moment could come at the same time as a stock market reversal. We will see. The bulls I know will be checking inhere to comment. But here anyway is your parabola. It's a bubble, and we know what always happens to them. They reach for the sky then crash to the ground.
No comments:
Post a Comment