Gold & Silver are in a Bubble? Hardly!!!!

[mamboni]

http://www.sharelynx.com/chartstemp/charts5/bubblecom08comp.php

Gold and silver have a long way to go, like to $5000 and $200 per ounce, respectively.

Discuss.

[osoab]

Shark Liver bubble?

http://www.sharelynx.com/chartstemp/BubbleComparisonsHistory.php


For those seeking to understand principles of bubble markets and willing to take some time, it is possible to turn to a classic work, such as Irrational Exuberance by Robert Shiller. For those whose time & inclination may not turn to economics, let me share with you where I first learnt of bubble markets. I'm referring to the Shark Liver Oil Crash of the 1930's by Peter French. Don't bother looking for his work in print or on the internet - Peter French was my grandfather - and to the best of my knowledge never wrote this case study down. Grandpa was an expert shark liver "speculator".

There was a steady but unspectacular demand for shark livers during the 1930's. (Shark livers were in demand for the manufacture of shark liver oil, a popular product of the time.) After fisheries were established in 1937 demand for shark livers increased. Prices rose from $50/ton in 1937 to $2,000/ton in 1941.

The 1930's were lean years for my grandfather, like they were for many. Grandpa lived in Southern California, and he discovered that he could make good money by driving his old truck to Baja California, and buying shark livers from local fishermen. He had no way to refrigerate the livers, so he drove like crazy back to Los Angeles.

Prices started going through the rook. My grandfather told every fisherman he knew that he would pay top dollar for raw shark livers on his next trip to Baja. The next time around, his truck was filled to the brim with shark livers.

Unfortunately, when Grandpa returned to the fishery with his truckload, he discovered he was not alone - other people had decided to get rich in shark livers and the fisheries had an oversupply. There was no demand for Grandpa's.

Grandpa said he drove around Los Angeles for three days trying to find a home for those shark livers - I believe he finally dumped them out of town. (He also said no matter how much he washed that truck, the smell never went away.)

That was the beginning of the end for the shark liver oil market in California. Massive fishing decimated the shark population - but that's a story for a different forum.

Here's the point - demand for shark liver oil was still strong when Grandpa showed up at the fishery with all his shark livers. The fishery was processing lots of shark livers, and lots of people were still buying shark liver oil. Grandpa got burned though, because his timing was bad and there were too many livers on the market when he tried to sell.

Homes are not as perishable as shark livers. For people that have the luxury of hanging onto them, they can wait until demand comes back. There are sellers at the moment though, about as desperate as my grandfather was, and contrary to what Mr Lereah says, demand won't be back in the next few months.

Over the last couple of years, too many people bought too many houses. It's too bad my grandfather isn't around any more, he could have taught them a thing or two.

Source: Unknown

I do like Fannie's number.