Halftime: Is Gold In a Bubble That's About to Burst?

Gold is on the rise and again approaching $1800. However, Wells Fargo is wary of the move higher and says the precious metal is in a bubble that’s about to burst.

It's warning investors to be wary of substantial gold exposure and cautioned clients to learn from the damage of past bubbles. While the precious metal may make further gains in the short term, Wells Fargo thinks it will drop in the long term.

So, is there a gold bubble and is it ready to burst?

Instant Insights with the "Fast Money" Traders

Trader Zach Karabell said he’d rather be short or out at this point, and he’s put his money where is mouth is by taking a little short position in gold.

“I don’t like trades that I think are a confluence of vast amounts of irrational emotions and panic about the uncertain future,” he said.

Although pros, including Dennis Gartman, think gold is becoming another currency, Karabell doesn’t quite buy it. He certainly doesn't think we’re going to a new gold standard. He called the “Armageddon” scenarios in which there is a run on gold because no currency is worth anything “unbelievably far-fetched.”

OptionMonster Jon Najarian is on the other side of the trade.

“I don’t think you want to establish big short positions here in this one,” he said, “not as its doing what it’s been doing lately.”

If the CME starts tightening up some more, he said that would be a sign to get in on the short side.

“But without that tightening I think people will continue to seek the precious metal,” he said.

Stephen Weiss likes momentum in the trade.

"I still think it will go through $1800," he said. "I won't be there for long."

Weiss said he just bought UGL Tuesday because he liked how it responded after the margin requirements were raised.

"If I lose money on it I’m calling it a hedge," he said, "and if I make money on it I’m going to say hey that was a great trade."



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Trader disclosure: On Aug 17, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Najarian owns (CSTR) call spreads; Najarian owns (TGT) call spreads; Najarian owns (GLD) call spreads; Najarian owns (WFC) call spreads; Karabell owns (AAPL); Karabell owns (GOOG); Karabell owns (GS); Weiss owns (VZ); Weiss owns (UGL); Weiss owns (EUO); Weiss owns (AAPL); Weiss owns (DE); Weiss owns (NAV); Weiss owns (JPM); Weiss owns (AGU); Weiss owns (BTU); Weiss owns (NIHD); Weiss owns (TWM)

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