Tuesday, September 16th, 2014 MST

$50,000 gold?

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.

Sinclair’s interview on watchdogusa.com and Ron Paul’s comments on the Ron Paul Channel are worth the time.

5 Responses to “$50,000 gold?”

  1. Steve

    I think that with the debasement of the dollar and other world currencies, that gold may soar in value for a short while. However, since gold cannot be digitized into a totally manmate digital currency, which the anti-christ will someday mandate, so that if one does not have the “mark” in his forehead or on his hand, then “no one will be able to buy or sell”. If this mark becomes the currency of the world, then gold will have no particular value except for jewelry perhaps, since it will be outlawed for use as a trading medium.

    Reply
    • Lou Troughton

      It would shock 99% of the population in the U.S. to learn that even 1/10th of 1% of the population believe this baloney.

      Reply
  2. Bernard Super

    My (layman’s) understanding of the US monetary system is:

    1. The massive money creation since 2008 is in Reserve dollars, that banks do not loan except to other banks.

    2. Most dollars (currency, money) in transactional use (i.e. not Reserves) are created by banks making loans. Only a small percentage of the money supply is manufactured by the Treasury’s mint in the form of ‘paper’ notes and coins, (which BTW also have to be replenished as they wear out and are destroyed).

    3. Just as money (dollars) are created, they are also ‘un-created’ (destroyed) by repayment of, or defaulting upon, debt.

    4. Banks are businesses that have expenses and competitors. To make (these dollar-creating) loans it must be both profitable and there must be willing borrowers. They may not loan out Reserves to the public (i.e. into the economy), and though they must have legally-mandated Reserve ‘coverage’ for their loans, they can always obtain any Reserves they don’t possess at the moment.

    5. Whereas loan repayment ‘un-creates’ the loan principal, the interest that banks charge on their loans has to come from somewhere – i.e. originates (almost entirely) from other loans – this requires a consistent expansion of the ‘money supply’ (=dollars in circulation) to support a well-functioning economy. This is what has actually happened since the founding of the Republic – irrespective of the flavor of the monetary system at any time.

    6. The actual – as opposed to the declared – purpose of the Federal Reserve is to provide a central clearing facility for all chartered banks, and serve as a lender of last resort in case of strains on any part of the banking system. The Fed creates Reserves (not ‘normal’ transactional dollars) in fulfilling its purpose.

    I’d welcome any critical comments on the above.

    Bernard Super

    Reply
  3. Richard

    The U.S. dollar is dying. It is currently just a pretty, oily, stinky piece of paper that is backed by nothing. The only reason that the dollar still has a value is because it is currently the global standard, but it won’t be for long

    As of right now our U.S. national debt is $17,547,428, 400,000 and is increasing about $10,000 a second. It is impossible to pay off this debt due to how our monetary system works. Our banks and the federal reserve (which is a company by the way) are committing fraud on microsecondly basis

    After the American Revolution our founding fathers understood that printing a currency is not a good idea. As a result, in Article 1, section 10 it was written that only gold and silver can be legal tender. Today, if you try paying in gold you get a free tour of a cop shop unless you live in Arizona or Utah. But we are not the first ones to make this mistake.

    The Western Roman Empire crumbled due to hyperinflation. They minted copper coins to the point where one gold piece was equivalent to millions of copper pieces. Many currencies have lived and died throughout human history, but gold and silver has outlived them all and will continue to do so since they can never be mass produced and are very rare no matter where you go in the cosmos.

    What’s really sad is the Bitcoin. People call it digital currency when it’s really just a chuck e cheese coin. You spend money to buy the coin, use the coin to get a good, and then the person who receives the coin sells the coin for currency profiting the Bitcoin foundation every step of the way. Bitcoin is a Ebay/Bank/Federal Reserve all at the same time. If our dollar is evil then the Bitcoin is a nightmare.

    Gold and silver may not be the best thing to back a currency but our currency should have some kind of backing otherwise government spending will get out of control.

    Reply
  4. Ron Grayson

    Richard: You leave out the fact that Bitcoin is not the creation of government. There is risk, but at least it is not at the hands of government. Also Bitcoin foundation does not control the block chain code. When a certain shady character wormed his way inside Bitcoin Foundation many members of the “foundation” resigned.

    Reply

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