How to know when the “long-gold trade” is overcrowded
Bill Fleckenstein writes a wonderful column on MSN Money on a weekly basis. Recently, he came up with this gem of wisdom:
We’ll know gold is overcrowded when . . .
For the long-gold trade
to really become too crowded, certain events will need to occur:
- Goldman Sachs (GS, news, msgs) will have had “bus tours” to a bunch of mines, like the tours it and other companies have arranged for different industries, particularly technology.
- The public will have to be involved in a major way, and we’ll see ads on Bubblevision encouraging people to buy gold instead of prodding them to sell their jewelry, as is the case these days.
- Banks will need to find a way to put money into gold — because no modern mania has ever ended without the banks finding a way to lose money in it.
- We will most likely need to see a frenzy of mergers and acquisitions, and a leveraged buyout or two.
Last, BusinessWeek will have to put gold on the cover, telling us how it’s the wave of the future, or some variation of that theme.