DislikedJust curious, is that possible that the non stable situation in the Middle East will cause the bubble explosion?Ignored
I say gold is a bubble because I can't see it's intrinsic value justifying it's price. A bubble happens when the expectation of even higher prices becomes the sole justification for paying the ever higher prices. It's like people are saying, I don't care what use gold is, and I don't care that it pays no interest or dividends, no matter what it cost right now I will buy it because it will be even more expensive tomorrow. Bubbles can form over many years, sometimes decades.
40 years ago this month, Richard Nixon announced that he was changing the rules and that the USA wouldn't exchange Dollars for gold at $35 per oz anymore. That is what gold cost 40 years ago $35 per oz, inflation hasn't gone up THAT much since then... People are buying gold because either they're scared or because they expect the price to rise. Most people are buying it because of the later. When they believe the price won't rise any more the price will drop like a stone because it doesn't have the underlying 'real' value to justify its current price. That doesn't mean you shouldn't trade gold though, just that you should be aware of what you are doing.
Gold prices will drop when the global economy becomes more stable and everyone that wants to go long already is, when everyone that wants to go long is already long the price falls as there is nobody left to buy. Without more buyers the price can't rise anymore and has hit it's peak. That is why turning points happen at extreme long/short COT ratios.