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A Gold Bubble?

The gold market has advanced to historical levels in a relatively short time.  Like the equities market in 2000 and the real estate market in 2006, gold may be the next bubble to burst.   While gold has many industrial uses, the primary market for gold is in the jewelry industry which is turmoil. Jewelry is not selling in this economy. Therefore, the run in gold has to be attributed to investors which are buying primarily out of fear of the Feds endless quantitative easing.  This aggressive move to support a faltering economy has caused concern as the value of the dollar has weakened sending more buyers into the safe haven of gold.  This should be reversed when the Fed eases its efforts to stimulate the economy.  There is no question gold should be a part of most investors holdings, but caution should be exercised after such an advance in gold prices.  For those who are questioning their positions, especially those who have made tremendous profits over the past five years, the question to hold or sell needs to be addressed.  Perhaps one should consider easing out of gold to capture some of those profits while maintaining a close watch for buying opportunities should gold collapse.  No one has a crystal ball, but history tells us what goes up…

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