Distant Sign Of Gold's Bubble Top

Simply put, it'll be junior exploration stocks heading for the moon. Andrew Mickey points out that we're not there yet; in fact, there's been a notable reluctance to move along the risk chain to the juniors. Financings exploded in the earlier stages of the bull market, but got kayoed by the '08 crisis. Despite froth in the juniors sector, financings are half of what they were in 2007.

When professional investors get greedy, they look for greater returns and are willing to take on greater risk to get them.

To find that risk in the precious metals sector, they move progressively down the risk spectrum.

They move from gold bullion (minimal risk) to major gold stocks (moderate risk, most are real mines that were profitable at $300 and $400 gold prices) to junior gold exploration and development stocks (risky as hell, but enormously profitable at the right times).

In short, when money managers’ greed pushes more and more money down to the riskiest end of the spectrum, it’s time to be fearful.

That’s why even though gold has is comfortably above $1400, it’s surprising to see the big money investors still haven’t gone down the risk spectrum as far as they have in the past.

The traditional "waiter/cabdriver indicator" ties in here. When you hear of waiters, cabdivers, shoe shiners, homemakers, etc. bragging about making fortunes in exploration juniors, it's time to run - or at least sell down to the capital-recovery point, where you're gambling only with paper profits. Another indicator is newly-minted day trader heroes, who acts as role models to an increaing number of new day traders on the sector.