Doug Kass has a Top 15 Surprises for 2011 list that is making it's way around the internet. Among his "surprises" is gold drops by more than $250 in a 4-week period. One of his anecdotal signs that gold is in a bubble, are the ubiquitous We Buy Gold signs he sees near his Florida home. The gold haters write about this all the time. Their argument is the omnipresent We Buy Gold signs are indicative of a top in the gold market, similar to the numerous We Sell Condominiums signs that were seen throughout Florida during the housing bubble.
Their argument is not only wrong, I find it intellectually offensive. First of all, during the housing bubble the signs said We Sell, meaning the ignorant masses were buying houses, thereby inflating the bubble. In the case of gold, the signs say We Buy, which means Dumbus Americanas is selling their gold and putting downward pressure on the price To put it another way, how exactly is an uninformed person that sells their gold at a price far below fair market value indicative of a bubble?
Here's a quick rule of thumb when listening to someone comment on gold: If they didn't start investing in the gold market 5+ years ago they don't know what they're talking about. When someone like Doug Casey or Eric Sprott (both invested heavily in gold in 1999) says gold is in a bubble that's when you should listen. Or, alternatively, when the gold street vendors start changing their signs to We Buy Sell Gold it's time to head for the exits.