Jim Sinclair recently predicted $3,200 – $3,500 gold by 2020 and “emancipated gold” hitting $50,000. Because of Sinclair having made some really accurate calls in the past, his prediction caused quite a stir in the gold community. Even Ron Paul commented and gave reasoning why Sinclair’s predication is not preposterous.
In my view, his $3,200 – $3,500 gold by 2020 is not extreme. Gold may hit Sinclair’s target well before 2020. However, $50,000 gold by 2020 seems unrealistic to me. Yet Ron Paul presents some statistics that support gold going to $50,000. Paul does note that if gold hits $50,000 it will not be in dollars with today’s purchasing power.
In my view, $50,000 gold by 2020 will become a reality only if there is a total collapse of the dollar–and all other paper currencies. That the world’s paper financial system is still afloat after the 2008 Global Financial Crisis indicates huge confidence in paper money. Except for precious metals investors, no one is running away from the major paper currencies.
Further, another financial crisis of the same magnitude would be less feared because the 2008 crisis did not result in a cataclysmic disaster. A horrible depression yes, but not a ruinous collapse of the world economy. And, the massive money creation since 2008 so far has resulted in little price inflation for consumer goods, which is what the average person uses to gauge inflation.
Confidence in paper money and central planning comes from decades of Keynesian economics being taught in schools around the world. No one, except advocates of Austrian economics, notes all the flaws in Keynesianism and historical precedents where paper money has ruined economies. Read any article or editorial in mainstream financial publications, and you will find sentiments that all economic problems can be solved via central bank activity or central planning.