The Washington Post writes:
Oh, gold prices may go up again, but investment advisers and regulators are warning investors to be careful about putting too much of their money in gold.
“We believe that we have reached the point where we can confidently state that interest in gold investing has reached the level of a speculative bubble,” the bank’s investment team wrote in a market update issued Aug. 15. “Prudent investors should be very wary of having substantial investment exposure to this precious metal in their portfolios.”
Quickly and with very little warning, the bottom can drop out on gold prices, the report said. During a six-month period in 2008, gold lost more than 30 percent of its value. In the 1980s, in just over two years, the price plummeted about 65 percent.
“We are seeing the exact same behavior at the height of the tech bubble, housing bubble and the Japanese Nikkei bubble,” Erik Davidson, deputy chief investment officer for Wells Fargo Private Bank, said in an interview. “Excuse the pun, but we are crying out to investors that gold is not a silver bullet. People want to believe there is a sure thing. There is no such thing as a sure thing.”
By the way, since last week we’ve been considering “shorting” gold with put options… just thought the article above corroborates with our view. For the gold bugs, this is our contrarian call… but we might be wrong, of course.
Full article here.