Gold at $655.80

May 20, 2006 at 2:49 am Leave a comment

I don't trade commodities, nor do I pretend to know any more then the average person about the sector.  If you haven’t heard, the price of gold has been rocketing up over the past year. 

In the past year, gold has risen over 50%.  In the same period, the S&P 500 is up a little over 15%.  Gold has outperformed the overall stock market by over 3 times.  If you have been long gold, this has been a great ride up in the past year.  Why do I bring this up?

A few weeks back, I ran into an old friend of mine, who I hadn’t seen in a while.  He starts to talk about how he’s been investing in gold and silver the past year and the great returns that he’s been seeing.  He recommended that I put some money into the market ASAP, as these returns are only going to get bigger.  He mentioned his friend had convinced him to buy more only a few days ago, because the friend had just bought some more gold and silver.  He was even talking about using the line of credit on his home to buy more gold.

This type of talk makes me think bubble. 

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Entry filed under: Bubble, Investing.

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Notes

The comments expressed here on eccoBay are my own and do not necessarily reflect the opinions or beliefs of my employer.

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