Photo: trader_john

From a 7/17/10 post of mine on the gold bubble:

I'm sorry, but gold is not worth anywhere near $1200 per ounce.

Yet, despite a drop on Friday, gold was trading at the astronomical level of $1194. This is just plain crazy.

For decades, gold has been marketed to the gullible as a safe haven for currencies when paper (and now electronic) money fluctuate. However, if you remember the history, gold fluctuates much more wildly than currencies do.

Gold is now trading at well over $1300 per ounce.

Can you say "crazy"? I knew you could.

I'm sure if any gold bugs read this, phrases like "chicken little" will go through their heads. That's what people who wrote about the housing bubble were accused of being...until that bubble burst.

Meanwhile, Mother Jones has let us know that one of Glenn Beck's sleazy gold advertisers is in legal troubles.

Glenn Beck might, for once, be right: the government is coming for your gold. But only if you happened to buy it from one of Beck's *one-time advertisers, the Superior Gold Group. At the request of prosecutors from LA County and Santa Monica city who have filed a civil suit against the company, Los Angeles County judge has ordered that Superior Gold be placed into receivership and all of its assets—bank accounts, real estate, and presumably gold stored for customers—frozen. On Monday, a court-appointed lawyer actually physically seized control of the company, presumably to prevent further wrongdoing. The lawsuit alleged that among other things, Superior had defrauded its customers by overcharging them, fraudulently inducing them to buy overpriced collectors' coins rather than the bullion that they wanted, and taking customers' money for coins they never produced. The prosecutors hope that the lawsuit will provide restitution for all of the company's ripped off customers. The judge will hold a hearing later this month to decide whether the company's assets should remain frozen until the case goes to trial.

If the allegations made by prosecutors are accurate, then this company is overtly sleazy and dishonest. Any company that advertises with Glenn Beck has to be more than a bit disreputable.

However, we shouldn't lose site of the fact that the entire gold feeding frenzy industry is a sleazy effort to take advantage of novice investors who haven't followed historical trends on highly volatile commodities like precious metals and who really didn't grasp the dot.com or real estate bubbles either. Anyone with a lick of sense knows that gold is going to crash and big time in the near to mid term, leaving a lot of peoples' speculative frenzy empty and their futures threatened.