Robert Shiller who got the dot-com and housing bubbles right says bonds are next and that's your gold price spike
Peter Cooper

In the first edition of his landmark book ‘Irrational Exuberance,’ published in 2000, the Yale professor of economics and 2013 Nobel Laureate Robert Shiller presciently warned that stocks looked especially expensive. In the second edition, published in 2005 shortly before the real estate bubble crashed, he added a chapter about real estate valuations.

And in the new edition, due out later this month, Shiller adds a fresh chapter called ‘The Bond Market in Historical Perspective,’ in which he worries that bond prices might be irrationally high. Is this the next bubble to burst in global financial markets? Bond king Bill Gross lost his job for calling this too early but that does not mean it is not going to happen. Watch out pensioners and governments!

Bubble trouble?

Noting that interest rates (which move inversely to prices) are extremely low given historical norms, Shiller writes: ‘The US bond market, showing such low yields, looks as it if may have gone through something of a bubble, and may collapse further, eventually.’

Where does the money shift after a bond market collapse? Equites would crash with it. This is when goldbugs get their massive price spike and gold becomes the final bubble of the asset cycle…

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