No one really knows the answer to that question, of course. It’s easy to find articulate analysts with intelligent arguments on both sides of the current debate. And really, it’s less about gold than it is about any asset that has had a good run of recent performance.
Whenever performance has been good, the question is always asked, “Is it too late to buy? Has the easy money already been made? Has the smart money already gotten out and moved on to the next big thing? If I buy here, am I going to be a sucker and a bag-holder?”
You can drive yourself crazy worrying about it because there really isn’t a good answer to the question. It all depends on human behavior-and good luck predicting the madness of crowds. For our part, we simply follow the trend. We hold assets that are strong and sell them when they begin to become weak. Sometimes trends flame out quickly, but often they go on much longer than investors expect.
I did see a stunning chart contained in a Paul Kedrosky post that reminded why trends can go on longer than anyone expects.
We all have very short memories. Relative to some past time frames-in this case, 1982-gold is not heavily owned in investor portfolios at all! Something to keep in the back of your mind.
Disclosure: some of our managed accounts currently have positions in DGL, GLD, and IAU.
Posted by Mike Moody 
