On Monday the price of gold bullion fell by 7.7%, the largest one-day fall in its price since 1983, and the third biggest fall on record. Analysts are somewhat puzzled by the fall in gold prices over the past few weeks (it is down about 30% from its high) as there have been no significant changes in underlying fundamentals. Could it be that there was a gold bubble? Click here to read more.
My colleague and former PhD student Gareth Campbell has created a website about the British Railway Mania - click here . This episode has been described by the Economist as probably the greatest bubble in human history. Gareth's website provides background on the Mania and posits some explanations for the 'bubble'. In his explanation of why the bubble happened, Gareth places a lot of emphasis on investor myopia regarding future dividends and uncalled capital. His study of investors during the episode does not support the view that this episode was fuelled by naive and irrational investors.