Gold bubble bursting because of gold prices decreasing

Individuals are starting to talk about a gold bubble burst. Investors have perceived gold as a safe haven during the global financial crisis. But after rising in value steadily since October 2008, the gold bubble may be reaching the bursting point as the global financial crisis fades. If the markets continue to rally, the demand for so-called safe investments like gold will fall. Gold went down quite a bit already from June 21 from $ 1,266.50 to $ 1,185. Article resource – Falling gold price could mean the gold bubble is about to burst by Personal Money Store.

Bursting the gold bubble

It could be a sign of the gold bubble burst that the gold prices are so unsteady. Not even India or China are that interested in gold anymore as outlined by Brian Renzy from Seeking Alpha. He said that gold is a commodity with a value based upon entirely on the assumption that it will increase in price. This is why individuals invested their lives into gold during the global financial crisis. The only reason gold is valuable is because investors have believed it is valuable. If a gold bubble burst would to happen, that would all change.

Market in Europe changes because of credit crisis

One reason the gold bubble may be about to burst is as the markets may have exaggerated the effects of the credit crisis in Europe to the global economy, according to Ron Acoba at Daily Markets. Acoba explains that there is not any effect on their business with the whole credit crisis. Rezny said that the gold bubble is about to “end in tears,” and that the recent decline in gold prices will get worse. Similar to what is happening now, gold peaked at $ 850 an ounce in 1980. Adjusted for inflation, that $ 850 was equal to $ 2,300. It dived to $ 253 by the time 1999 had hit.

Guess it didn’t keep individuals safe

The gold bubble is precariously large as millions of individuals are buying gold. Gold is even endorsed by celebrities. Hucksters like Glenn Beck are convincing average people to dump a large percentage of their investment portfolios into gold — even their life savings — to be safe when the global economy collapses to the stone age. Beating Broke is concerned about what will happen following the economy recovers. Numerous will lose money buying it for $ 1,100 and $ 1,200 an ounce and then seeing it drop to $ 800 or $ 900 an ounce. If 30 percent of everyone’s money is lost here, the gold bubble is bound to burst. When people try and sell their gold, prices will drop more. True believers in gold will lose even more.

More on this topic

Daily Markets

dailymarkets.com/forex/2010/07/28/did-the-gold-bubble-just-pop/

Beating Broke

beatingbroke.com/is-gold-the-next-bubble/