Nouriel Roubini called gold a bubble in several tweets this morning:
The higher they go the harder they’ll crash: when gold goes hyperbolic as now, it’s a bubble. Issue is at which level it crashes? 3K, 4K…?
A Tale of Two Bubbles: attached a Gold vs Nasdaq Chart, time adjusted. Courtesy of a Reuters editor
Question for gold bugs: How much of gold long positions are financed now, as Nasdaq was in late ’90s, with leverage? Do CME data show that?
Of course a bubble doesn’t mean you should stop buying. Roubini said earlier this week that rising uncertainty supports gold: “That’s the mentality that leads gold to be at $1,800 (an ounce) or above. So gold, because of that, can go higher.”
Yesterday Wells Fargo compared gold to past bubbles and came up with a different conclusion: “In the five years prior to their respective peaks, the NASDAQ rose 500 per cent and oil rose 340 per cent. Over the last five years, gold has not seen nearly the trajectory of increase, rising only about 200 per cent. Thus, based on this metric, gold does not yet appear to be in a bubble à la the NASDAQ in 2000 or oil in 2008. However, the 200 per cent five-year increase has risen from 150 per cent in our April report.”