The Gold Bubble Is 4,000 Years Old, And It Won't End Now

Jacob Goldstein

April 15, 2013 3:31 PM

NPR 

After rising for years, the is now falling sharply. Lots of people are saying . It isn't.
I have no idea whether the price of gold will rise or fall. But even if gold loses half its value tomorrow, the gold bubble won't be over. 

Defining a bubble can be surprisingly tricky, but here's a working definition: when the price of an asset rises to a point that can't rationally be justified by fundamentals. (In that sentence, "asset" basically means anything people buy and sell as an investment. "Fundamentals" basically means the stream of payments the investment generates.)
 
In real estate, for example, you can compare the price of a house to how much you could get if you rented the house out. This ratio has been pretty steady over the long run. But during the housing bubble, the ratio of home prices to rents . During the bust, it fall back toward its historic norm.
[Read more]