I have the same concerns. All those ETF and massive physical investment holdings. The ETF are a button click away from a sell.
Its different until its not. Remember if you can how people were talking about gold those days. My father bought some gold and kept it for years, and sold for a loss also. So I think the challenge is to find a collection of neophytes, perhaps under 30 somethings who start to think gold is cool. Maybe then its the time to bail. No-one will be left to buy.
Perhaps someone has ideas for a better target control group or Canaries in the mine?
At the moment, physical stuff is disappearing, and the futures at some point will not be able to deliver. The crooks at the CME are raising the deposits all the time to prevent the futures longs pushing price, but it is conceivable that price doesn't get priced by the CME, maybe e-bay instead. Perhaps someone starts up the bullion shop where all shops have prices shown...a physical exchange. Counterfeiting/fakes is going to be a problem at some point though.
In the meantime, go with the tide.
If you look at a logarithmic chart of commodities prices since 1890, it just trends down relentlessly, world wars barely even register. This has occurred through technology of finding and processing lower grades. Ability to extract economically for low grades provides huge quantities as there are enormous quantities of low grade. Enter stage right - the cost of energy. Doesn't matter if oil, gas or sunlight. WE have been exchanging a cheap abundant thing(energy) for something of more value. Those days are over. So low grade processing will continue, but the cost will rise because of energy costs. I think we have arrived at the end of the beginning - new chapter.
The scrap business in the future and scavenging from demolition is going to be a good business. Just my thoughts.
EVG Price at posting:
19.5¢ Sentiment: Hold Disclosure: Held
