Where Is Gold on the Bubble Map?


"The current gold market is nowhere near the end phase of a historic bubble."

Gold has been climbing, so gold bulls must endure a new round of "bubble" cries from the gold bears.

In the short term, the bears could be right. But to say that something like the current gold bull market is a historic bubble nearing the bursting point requires more analysis. . .why not compare it side-by-side to the other historic bubbles?

This simple exercise using the three most well-known historic bubbles of modern times, produces this:

Three most well known historic bubbles of the modern age

Long-term bull markets usually end in a parabolic rise. The chart divides these bull markets into relatively flat 812 year and 26 year parabolic rises. The current gold market is nowhere near the end phase of a historic bubble. In fact, it looks to be just now getting cranked up for that.

I left off from the chart some comparisons that may not apply (e.g., oil up to $147 in 2008 is sometimes referred to as a historic bull/bust cycle). But the credit/great recession gyrations in oil and most commodities, including gold, may wind up being a severe, but brief, interruption of these bull markets. The three charted are historic bulls that have been certified dead for years. I don't think we can declare oil dead just yet.

Though some respectable investors have described gold's current market with the word "bubble," including Chinese officials tasked with diversifying China's bank holdings and George Soros, who recently commented that gold was "the ultimate bubble."

But China could be talking down the price of gold so it can add more. And George Soros was talking about gold being the end result of a chain of bubbles.

The bubbles of 2000, loose money, housing, more loose money, etc. ultimately lay the bubble forces at gold's door. So if gold is to be the ultimate historic bubble, it has a long way to go from here to even equal its rivals.

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