Tags: Arturo Bris | gold | bubble | price | surge | rise | record

Swiss Professor: Gold Price Surge Isn't Bubble

By Dan Weil   |   Wednesday, 23 Dec 2009 08:24 AM

Some experts say gold’s 23 percent rise over the past year has put it in bubble territory. Arturo Bris, a finance professor at Switzerland’s IMD business school, begs to differ.

“Are we experiencing a gold bubble? I do not think so,” he writes in Forbes magazine.

Gold’s surge to record highs above $1,200 an ounce stemmed from the exploding budget deficits around the world and fears of rising inflation.

“However, gold trades are dominated by institutional investors and large traders who do not panic easily,” Bris writes.

Central bank buying accounted for much of the market’s recent activity.

“China makes the most claims about a gold bubble and is simultaneously accumulating gold reserves, which suggests it has an interest in purchasing cheaper gold,” he maintains.

In addition, bubbles can only be known after they have occurred, Bris says.

“Whether the current gold price is artificial, only history will tell,” he argues. “The only thing we know for sure is that the price of gold is at a historical maximum.”

But the same was true of stock markets in 2007, and they weren’t a bubble, Bris says.

“Gold is certainly expensive, but it is worth what investors are paying for it.”

But other experts say that with the dollar rebounding, gold has run its course.

“Looking out to 2010, the story will be different as some of the favorable fundamentals underpinning gold will fade,” Toronto-Dominion Bank analysts say in a report.

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Some experts say gold s 23 percent rise over the past year has put it in bubble territory. Arturo Bris, a finance professor at Switzerland s IMD business school, begs to differ. Are we experiencing a gold bubble? I do not think so, he writes in Forbes magazine. Gold s...
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