Gold fever has been in the air for a several years now, and I understand the reasoning. When people grow suspicious of the USD gold is the save haven for those that feel the dollar is growing weaker. I know this is an unpopular opinion, but there are clear signs that gold may be in a bubble. When considering how trading works, there are professional traders (we will call them Regulars) and there are are those that are not just investing on a hot tip (here referred to as Visitors). The difference between the two is that the Regulars are usually technical traders that trade based on charts and fundamentals, and the Visitors trade on feelings (like gamblers). Claim 1: Too Many Visitors Many tend to think that gold is not in a bubble, and that the price of gold may have reached a new bottom (the high price of gold they feel is the new norm), but there is evidence that I will show that says that gold may be in a bubble. First of all one of the preliminary signs of a bubble is when there are more Visitors investing than Regulars. Whenever you have bus drivers and construction workers investing in an asset, there is a bubble in the air. The problem with visitors is that they have a low tolerance for market fluctuation. If the price dips to low for their tolerance, they flee in packs from the asset (we see this all the time with stocks/commodities/forex). When the Visitors start leaving it traumatizes the asset (even forcing some Regulars to leave the asset alone). This is the proverbial bursting of the bubble, thus ending the Boom/Bust cycle. This is what we refer to as an adjustment, when the weekend warriors leave, and the real warriors stand their ground. There are far more Visitors in the gold market than usual. Claim 2: Silver Price Potential In the excitement of gold, it is incredible that the price of silver is so low considering the potential for silver to climb. While gold has seem record highs that are hundreds and hundreds of dollars more expensive, the price of silver is surprisingly low. Since precious metals are price by their rarity (how much is available), the price of silver should always be far below that of gold. On the other hand, silver is also an asset that those that are fearful of the Dollars fate should consider. But we see just the opposite. It seems that all of the attention is squarely focused on gold. While the price of gold is at an irrational height compared to its historical price, there is not that same attention on silver. In fact, the price of silver is less than half its highest price. Today (May 22nd) the price of silver is currently $19.67/oz, and the record high was reached back in the year 1980 when silver reached $49.45/oz. That was back in 1980! The closest silver got to the record in recent years was April 28th of 2011 when the price reached $48.70/oz. On January 18th of 1980 the price of gold was $830. This means that the price of silver was 6% the price of gold at that time. This has been fairly consistent until recent years. Now the price of silver is 1% the price of gold. For every ounce of gold mined, there are 10 ounces of silver mined; this attributes to the historical price difference. The price of silver could be 5 times the current price if the historical value held true today. Claim 3: Platinum Price Too Close As stated earlier precious metals are priced according to their rarity. Platinum has historically been considerably higher than gold, because of its rarity. There are only 130 tons of platinum mined annually compared to approx. 2,500 metric tons of gold. This is roughly 6% of the volume of platinum. Today the price of platinum is $1,496/oz. compared to the almost $1,300/oz. for gold (is this starting to hit home). The price of gold is clearly too close to the far more rare platinum. I feel that according to these stats, the price of gold will fall before the price of platinum breaks out. Conclusion Based on the historical fundamentals of precious metals, I feel that gold is in a definite boom cycle, and I am pretty sure that the bust will come eventually. It may be years before the Visitors flee, but if they see these facts, they may vacate their positions much sooner. So, what do you think about the price of gold today considering these facts; is this a bubble or not?