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20-12-2010, 05:04 PM
Soros Gold Bubble at $1,384 as Miners Push Buttons
Just came across this. Pretty interesting read I think. I'm not a gold bug although I must admit to being pretty convinced by the macro thesis at one point. Just some points to think about and for further discussion.
Anyway, some interesting points from the article- a) I didn't know that it was the World Gold Council who initiated the creation of the SPDR Gold ETF, which as the article purports, made Gold much more accessible to the layman investor and is a major contribution to the prices we're seeing now. b) SPDR gold trust holds more gold than all (except four) of the World's coutried combined.
Are current prices a reflection of 'real' demand now that frictional costs such as storage has been removed? Or is gold in a bubble? If it is in a bubble, is it ready/about to pop? The debate goes on...
Here's a soundbite (The "Burton" mentioned below is James Burton, one of the main players in the creation of the SPDR Gold trust. He's profiled in the article. Please read it):
When it worked to create the fund, one concern was that the exchange-traded product might contribute to a bubble. Burton and his investment team worried that too much success would shoot gold prices up too fast, resulting in a crash like the one that occurred in January 1980, he said. Back then the bubble burst in one day and took two decades to recover.
Pushing Every Button
Ultimately those engineering what would become SPDR Gold decided it wasn’t their job to worry about it.
“Our primary mission was to find every button we could push to stimulate demand,†Burton, 59, said in an interview in London. “We also knew that we had launched something that we could not control.â€
Just came across this. Pretty interesting read I think. I'm not a gold bug although I must admit to being pretty convinced by the macro thesis at one point. Just some points to think about and for further discussion.
Anyway, some interesting points from the article- a) I didn't know that it was the World Gold Council who initiated the creation of the SPDR Gold ETF, which as the article purports, made Gold much more accessible to the layman investor and is a major contribution to the prices we're seeing now. b) SPDR gold trust holds more gold than all (except four) of the World's coutried combined.
Are current prices a reflection of 'real' demand now that frictional costs such as storage has been removed? Or is gold in a bubble? If it is in a bubble, is it ready/about to pop? The debate goes on...
Here's a soundbite (The "Burton" mentioned below is James Burton, one of the main players in the creation of the SPDR Gold trust. He's profiled in the article. Please read it):
When it worked to create the fund, one concern was that the exchange-traded product might contribute to a bubble. Burton and his investment team worried that too much success would shoot gold prices up too fast, resulting in a crash like the one that occurred in January 1980, he said. Back then the bubble burst in one day and took two decades to recover.
Pushing Every Button
Ultimately those engineering what would become SPDR Gold decided it wasn’t their job to worry about it.
“Our primary mission was to find every button we could push to stimulate demand,†Burton, 59, said in an interview in London. “We also knew that we had launched something that we could not control.â€