I've posted the naz and nikkei vs gold " bubble " charts in the past. Former were bubbles.
I've posted the naz and nikkei vs gold " bubble " charts in the past. Former were bubbles.
Today's WSJ...
Gold Mania? Not Quite
![[roi1006]](https://si.wsj.net/public/resources/images/OB-KI744_roi100_G_20101005174201.jpg)
Associated Press
The conventional wisdom on Wall Street is that the gold bubble is about to pop.
After all, people will tell you, the little guy is now totally onthis bandwagon. Ordinary Mom and Pop investors from Bakersfield toBoston have dumped their stocks and poured their money into gold coinsand bullion funds. It's a mania–just like Nasdaq '99, real estate '04,gold '10. Look at all the TV commercials. Look at these new gold coinvending machines. Everybody knows that when the ordinary public getinto a boom, the smart money gets out. Right?
The market for gold may show signs of a bubble, but it's one that hasn't burst yet, columnist Brett Arends says.
2:07
Stocksend mixed but Paul Vigna explains why the real action in the financialmarkets today was in currencies, bonds and commodities.
I decided to check out the facts on this urban legend. And they may surprise you.
How much have ordinary Americans actually invested in gold this year?
According to Financial Research Corp., a Boston firm which tracksthe data, investors poured $7.4 billion into gold bullion throughexchange-traded funds from the start of the year through the end ofJuly. Nearly all of that went into State Street's SPDR Gold Trust.
But a lot of that money came from big institutions like pensionfunds, hedge funds and mutual funds. According to State Street, theseaccount for at least 45% of the investment in GLD these days.
So individual members of the public probably accounted for only about half the new investment, or $3.7 billion.
The public has also been buying gold coins and bars. According toGFMS, Ltd., the London-based consultancy that produces the mostauthoritative figures, U.S. investors bought about 45 metric tons ofgold bars and coins in the first half of this year. This is less thanthey bought last year.
Based on prices in the first half, that maybe accounted for another $1.7 billion or so of investment.
Grand total: The public bought about $5.4 billion worth of gold.
But the story doesn't end there. At the same time, others wereselling gold. Lots of it. I was walking through the mall on Saturdaywhen a young woman came up to me, thrust a plastic bag and leafletunder my nose, and asked me if I had any old gold jewelry to sell. Thecompany she worked for would do a deal on the spot.
This is a new twist on a well-established business. In every majortown there are stores that do a busy trade buying and selling gold. Asthe price of gold has risen, more and more people have been ringing thebell. In an economy like this, where so many people are struggling, itis a tempting offer.
How much has been sold? Nobody knows for certain. But GFMS says thefigures so far are about 10% to 20% higher than last year. Some veryrough numbers suggest sales through the first half may have come toabout 70 metric tons or so–worth maybe $2.7 billion.
So if individualsbought $5.4 billion worth of gold, and sold about$2.7 billion, their total net investment comes to $2.7 billion. Theseare the figures through early summer: July for the bullion funds, endof June for the physical gold.
Are these bubble levels? Is the mania near its peak?
Try this. Through the end of July, according to FRC, investorspoured $22 billion into emerging markets mutual funds. And a remarkable$155 billion into bond funds. Compared to these figures, the amountinvested into gold is chickenfeed.
But it's a tiny share of retail inve