Velocityshares Daily 2X Vix Medium Term (TVIZ)

[gldtimer]

Why Both Gold/Equities are Ultimate Bubbles.

I've come to the conclusion that to be an ultimate bubble asset the asset needs to move higher on both good news and bad.

Seems that one half of the gold market champions higher inflation while the other deflation.

Any day of trading should make one of these two camps happy as measured by FXA (inflation loving): FXY (deflation loving). Assume FXA goes up an 100% of the inflation market lovers buy, but only 50% of the deflation holders sell...going along with the 'bad' news not selling since the price of gold is rising.

The next day the Yen does better drawing in 100% of the deflation buyers, but only 50% of the inflation sellers...going along with the 'bad' news only 50% of the inflation holders sell since the price is rising.

Repeat each day and before you know it you have a bubble. So when does the bubble pop. When the price of gold drops whether it's an inflation OR deflation day. This has the inflation holders selling on deflation days and deflation holders selling on inflation days

The same is true with stocks but with interest rates driving the action. Interest rates going up is good news to half the equity holders meaning growth and inflation...pricing freedom, is going up. The other half of equity holders love lower interest rates causing multiple P/E expansion.

The end of the bubble is the same as with gold, when stocks fall whether interest rates go up or down.