Gold - when the bubble bursts

Posted | 18/03/2015 / Views | 3083
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Doug Nolan is a widely applauded “bubble” specialist.  In his last bulletin he had this to say:

‘“Total Securities” as a percentage of GDP is helpful for Bubble Analysis. After beginning the nineties at 173% of GDP, “Total Securities” ended the Bubble year 1999 at an unprecedented 341%. The bursting “tech” Bubble saw this ratio decline to 267% to end 2002. Mortgage finance Bubble reflation then pumped this ratio to a record 360% by the end of 2007. The Bubble burst and “Total Securities” ended 2008 at 297%. Six years of incredible monetary inflation had Total Securities ending 2014 at a record 417% of GDP.’

When bubbles go pop, money (that which is left or escapes) rushes to gold.  Just before the time that BNP Paribas precipitated the banking seizure in August 2007 gold was AUD775.   When Lehmans collapsed in September 2008 it hit around AUD1140, when the LondonG20 group agreed on $5t of global stimulus in April 2009 it was about AUD1330 and when they started bailing out countries not just banks (ala Greece) in May 2010 gold hit AUD1430.  So gold nearly doubled in that period whilst financial markets plummeted. 

Doug paints a pretty clear picture.  Are you ready?