Is There a Gold Bubble?

A lot of people don't understand the dynamics that make up financial bubbles, and it's not simply the fact that prices of a stock, commodity, or real estate is skyrocketing, it's more related to who is driving those prices up and for what reasons. And that is true with gold futures, gold prices, gold production and gold mining companies, or many other of the precious metals as well.

There really isn't a bubble until the general public begins to invest in something. The fact that they have no idea why they're investing other than they're hearing about it on the news and around the water cooler. That's what results in bubbles, not prices rising for good reasons.

Gold prices are rising for real reasons, and the majority of those investors aren't main street America or mainstreet other countries as well. Until that happens, there will be gold futures price corrections, but not the collapse of what some consider a bubble, as a gold bubble hasn't arrived yet, as most Americans still don't understand or recognize the value of gold; it hasn't entered into their minds yet. Once it does, then we'll have a good chance of seeing a gold bubble. Until then, we should be sure gold will continue to have support and prices will continue to rise over a period of time.

A number of countries, like China and India continue to stock up on physical gold, knowing the infaltionary pressures ahead, as well as the ongoing collapse of the value of the U.S. dollar. Other major investors have also focused on investing in physical gold and gold futures in preparation for the continuing increase in the price of gold for years ahead.

With the price of gold growing fast, it doesn't mean it's in a bubble like we've been talking about, but it could be due for a correction, or at least we should probably hold off until it pulls back a little, and watch how it responds from there.

Gold mining stocks are also at high multiples at this time, making them very expensive to own. In general, it's a time to hold gold and not buy too much. At the same time, I wouldn't sell any gold at all any time soon.