Analysis: The commodity-price bubble

Get ready for the pricking of the gold bubble.


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San Ramon, CA USA
Life for the gold hawks is just about over. Why? Because when the checker at a major US grocery chain leaned across the counter and furtively showed me her new found wealth of gold coins and told me she bought them with money from her pension plan, that proved to me that gold was already in a serious bubble. But it is worse if you own a gold ETF as they do not have the bullion in store. If gold ETF's fall, say 20%, there is no way that you can call up the ETF and ask for your gold to be delivered toute suite. Thus the store of value doesn't hold as well if you can't get your hands on it. This is noting but a huge bubble and as the old saw goes, if everyone on the boat moves to one side, you must mother to the other side to save yourself.

Gold has probably got more chance of reaching US$7000 per ounce than US$700 over the next 2/3 years. Americas influence on the gold price and commodity prices in general is lessening daily. The real influence and one that Australia must start to recognise sooner rather than later is what is happening and will happen between the Gulf - Arabian not U.S. - and Japan. Pessimists like Access Economics should move their physical presence and thinking to Wall Street and other places of growing irrelevance . Of course commodity prices are cyclical but this cycle will last many decades and whatever America and to a lesser extent Europe does over the next couple of decades will have less and less impact. Change has started and no matter what Washington or some Australian brokers do or think wont alter the situation. My view.

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