Gold prices are falling today as some gold investors take profits and others with long positions get out of the market on fears the general public is entering into the fray, which could create a gold bubble which will burst.
I'm not sure that the person on the street has become engaged in the market yet, as they hadn't as of just recently, but it is a real concern to take into consideration when it does happen.
But even so, because gold has a reason for going up, the fundamentals will support those who don't understand why they're entering the gold market, even if they bid up the prices higher.
Gold has a lot of room to move higher, and the economic conditions, inflation, the EU debt crisis and China inflation, will ensure gold has a lot of room to rise.
Even so, we're always going to have corrections when gold, or any investment, soars quickly, but in the case of gold, there's no fears that it's a bubble about to burst; it simply hasn't reached that level yet.
For example, when the housing market went into a bubble, it was when the general public entered into buying home as outrageous and above-market prices which ultimately led to it bursting. But there was no known or existing reason for the price of houses to go up that high, and it was predicted by many watching the situation that it was going to collapse.
With gold it's different, because the underlying fundamentals warrant an ongoing increase in prices, even if many of those investing don't understand why.
We're far from a gold bubble, or a gold bubble bursting at this time, although eventually that will happen, but it's probably years away. The majority of ordinary investors still say they have no position in gold, and until that becomes a reality rather than an unproven fear, we will be okay.
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