By Bill Fleckenstein
11/20/2009 MSN Money — There has been an endless amount of chatter about the price of gold being too high (it’s not) and perhaps representing a bubble. It also seems that fair amounts of ink and windage have been wasted on worries about the gold trade being “too crowded.”

In my daily column on my own Web site, on Sept. 17, I noted a remark by Dennis Gartman of The Gartman Letter that the gold market was “terribly, egregiously, preposterously, shockingly overpopulated.”

That day, gold closed at $1,014 an ounce. Here we are, about two months later, and gold is more than 10% higher.

In a bull market, worrying about an idea being too crowded with like-minded investors is not very productive. More likely than not, it will help to eliminate you from a winning position.

…it seems to me that what’s crowded is not the long-gold trade but more likely the camp of folks who think it’s too crowded.

[From the Buttonwood column in last week's Economist] …the psychological sea change that appears to be taking place at the central-bank level: “For bullion bulls, the implication is clear: central banks no longer trust the creditworthiness of other governments. And if they have lost confidence, private investors should do the same.”

“Developed-country governments have attempted to control bond yields through quantitative easing and to support stock markets through ultra-low interest rates. But they cannot support their currencies as well without risking problems in the bond and equity markets. Gold’s surge may indicate that investors fear the next stage of the crisis will occur in the foreign-exchange markets.”

[source]

Comment: Fleckenstein is always worth a read…