After Housing, What's the Next Great Bubble?

Bubbles are created by excess dollars sloshing around the globe trying to find a home. Those dollars inflate whatever markets they pour into. During the 90's, money poured into the dot-com industry. Until recently, housing has appreciated in a rather orderly fashion (for the past 75 years) with the exception of the past six years. Now that it's starting to fall off a cliff, the housing bubble is ending, but by no means is this the end of the last great bubble.

What's the next great bubble? That giant monster of dollar liquidity is still out there and it still needs to find a home. And so far, it's only been knocking on the door of commodities. The inflow into commodities over the next several years will quicken at breakneck speed. And remember, it's not just dollars shifting out of housing that's entering commodities, it's all the new dollars being printed that will also enter commodities.

It's all about real stuff. Real stuff is store of value. Real stuff gets used in everyday society. Things like energy, agricultural products, gold, silver and base metals. Paper money, on the other hand, represents someone's promise, and promises get broken.

What fundamental shifts could burst this bubble? It would have to be something significant and unexpected. A global pandemic. A worldwide economic collapse. A greater world war. But shy of an asteroid hitting the planet, these fundamental shifts wouldn't burst the bubble, they would simply slow it down.

Five years from now we'll be looking back on today's prices as "the good old days".