UPDATE: I posted this piece last evening (timed for this AM). At about 7:30 this morning, Gold is up $19.00. Perhaps Wells Fargo’s ability to assess mortgages carries over to precious metals.
The Liberty Watch update in an email reports on Wells Fargo’s warning on Gold:
Gold Bubble Alert: Wells Fargo Warns Clients
While it’s easy to be bullish on gold in light of the U.S. Government’s current fiscal issues, Wells Fargo issues a note of caution:
“…’interest in gold investing has reached the level of a speculative bubble.’
That’s right: they used the “B” word — and they’re sure to get plenty of grief over it. Such is the ardor of the gold bugs.
True, gold prices have risen to $1,800 an ounce from $1,600 in less than a month, and plenty of canny strategists say the precious metal could easily hit its real all-time high of $2,400 in the not-to-distant future.
But the team at Wells Fargo Private Bank (WFC) would rather call it a bubble now and maybe miss some upside than let their clients suffer potentially catastrophic consequences.
“As with all bubbles, we know that we run the risk that our view may turn out to be wrong (’early’ would be our preferred euphemism) in the short run; however, we believe that we will be proven right in the long run,” says Erik Davidson, deputy chief investment officer for Wells Fargo Private Bank, in a report to clients.”
Frankly, no one really knows whether Gold is over or underpriced. It certainly has moved dramatically recently. According to Kitco.com, as I write this, gold is up dramatically:
One might think it is due for a slowdown or even a correction. But a bubble? Probably not yet.
Hi Monty: You probably know that Tyler Duden is suggesting a parabolic rise in the next little bit because apparently Venezuela’s Chavez has recalled his gold out of Western vault banks. If this is a big withdrawal and the physical gold is rare compared to paper. This may be the beginning of a run on physical gold: http://www.zerohedge.com/news/chavez-pulls-venezuelas-gold-jp-morgan-great-scramble-physical-starting
Gold $1814 and counting.
P.W.
I saw the article this AM. IMHO, gold has a long way to run. It is virtually impossible to determine how far because it depends upon how much the world continues to depreciate their currencies. This bull is likely far from over, although it will be more volatile from here because newcomers will be scared out at the first signs of a correction.