A bubble is when a commodity gradually increases in price – as compared to when it crashes, which is the direct opposite. The circumstances can be trumped under what is known as "the greater fool theory" – one person sells to another who agrees to pay even more, which perpetuates the bubble.
"Showing people that the market was in a price bubble just fueled the price bubble even more," Indiana University economist Arlington Williams told NPR.
An uninformed buyer causes havoc in the market as well. Applying the brakes to spiraling prices can be a daunting challenge as the price runs risks of soaring more than the true value.
And when this applies to a commodity of undetermined value, the circumstances become more nebulous.
"It's just not clear what the fundamental value of gold is," economist and author Tim Harford told the outlet. "It's worth something because people have always thought it's worth something. And that's really weird, because what it tells you is gold is in a 4,000-year-old bubble. And if it's lasted 4,000 years, maybe it will last another 4,000 years. Who am I to say?"
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