Is Gold the Next Bubble?

Brett Arends - It's been the amazing, runaway boom of the past decade. If you'd put your money into gold at the lows about 10 years ago, you'd have made a nearly 400% return. That's left pretty much everything else—stocks, China, let alone housing—in the dust.

But with gold now trading near record highs, the big $1,200-an-ounce question is obvious.

Is the gold rush over? ...

So far gold has followed the same path as the previous two bubbles. And if it continues along the same trajectory—a big if—gold today is only where the Nasdaq was in 1998 and housing in 2003.

In other words, just before those markets went into orbit.

Maybe the smart money is out of gold today. But how easily we forget that the smart money got out of these past bubbles way too early. The really smart money knows you make the most money in a bubble right at the end, when it goes manic.

There are other reasons to think that gold is still a long way from that point.

Like the futures market. It is predicting gold will rise by just a few percent a year over the next few years. That's less than you'd get from municipal bonds.

When the market thinks an investment is going to underperform munis, it's safe to say we are not in the midst of euphoria. ...

via ROI: Is Gold the Next Bubble? - WSJ.com.