A Minskian roadmap to the next gold mania

Neil Hume over at FT Alphaville has posted several snippets from Societe Generale’s Dylan Grice on Minsky & Gold:

Article provides a nice review of Kindleberger & Minsky

Click Here To Read: A Minskian roadmap to the next gold mania

Introduction (Via FT Alphaville)

Central bank hoarding of gold in 1970 ushered in the famous gold bull market. With central banks likely to be net gold purchasers in H2 2009 for the first time since 1988 the same starting gun is ringing out today. The price at which the USD would be fully backed by gold (as it was during the peak of the 70s mania) is $6,300. So there is a case for gold being “cheap.” Moreover, the 70s bull market was facilitated by tight energy markets, overly accommodative central banks and nervousness that policymakers had lost their way. Sound familiar?

If my “valuation” of gold strikes you as a desperate attempt to value something which can’t be valued, it’s no different from metrics such as the “market cap to clicks” or “ARPU” ratios which were used in the late 1990s during the technology bubble when demand for bullish “valuation analysis” mushroomed. They seem crazy now but speculators bought into them during the tech craze. And there may well be a bubbly parallel … Charles Kindleberger, drawing heavily on the work of Minsky, outlined the following “anatomy of a bubble”.

Click Here To Read: A Minskian roadmap to the next gold mania