Tuesday, May 24, 2011

The Case For $5,000+ Gold...

From someone other than me: 
(1) China is now on an all-out campaign to build up its military. (2) China wants the renminbi to backed with a huge percentage of gold, thereby making the renminbi the world's best and most trusted currency.  To compete, I believe that somewhere head the US will have to back its current irredeemable fiat currency with gold. In order to do that, the US will have to boost the price of its huge gold hoard to a level where the dollar may be backed anywhere from 50% to 100% with gold. That could mean unilaterally raising the price of gold to maybe $5000 and ounce or more...I thought that gold, closing higher, in the face of the stronger dollar, was significant. Gold appears to be advancing against almost all fiat currencies...
Here's the LINK

Points 1 and 2 above are not new to me.  I've believed all along that China wants to ultimately reinstate a gold/silver-backed currency.  They will need #1 in order to accomplish that.  In order to accomplish a suitable backing, the price of gold/silver will have to revalued by several multiples from where it is here.  It will be interesting to see if China forces the U.S. to provide full-accounting in public of its gold holdings. Again #1 above is a requisite to pull that off.

$5,000 is a number that seems to have been "popularized" by the widely publicized Jim Rickards.  I believe Rickards is either low (gold target) or wrong (view that Fed won't continue QE) on many of his views.  Frankly, I believe $5,000 is too low.  Although I refuse to disclose my view on the ultimate target for gold - for the reason that I don't want to face the same vehement, self-righteous indignation that I faced back in the early 2000's when I said housing would collapse - I believe that $5,000 could be low by at least a couple multiples.

Of course, by the time all the events take place that would drive to gold to where I think it can go, we may be fully embroiled in in WW3 (see RR's #1 above) or life will be unbearably miserably and democracy-free in this country...


  1. Its hard to be higher than FOFOA's $55,000. Higher targets are becoming more common place by the day it seems. I doubt you'll get very much vitriol by revealing your target at this point.

  2. LOL. His is higher than mine. Won't get vitriol from goldbugs but that's less than 5% of the population!

  3. People need to realize the game being played out MUST come to an end. I am just amazed it has lasted as long has it has already.

  4. FOFOA recently hinted at $60,000 (maybe an inflation adjusted price since his original was from somewhere around 2009 I belive). Still, although he might have the highest 'target' his essays seem to be the most convincing and eloquent discussion of gold on the web.

    Thanks for the articles Dave, always a good read.

  5. Hi Dave,

    Maybe you or another poster here can answer the following question. If a person has gold and/or silver in GoldMoney.com, which is an overseas company, is that person subject to the precious metals 28% capital gains tax if they cash out at a profit? The gold/silver is either held in London, Zurich, or Hong Kong.

  6. Oh how fickle the scum bag ruling elite are....when the Hunt's needed silver col lateralization it was a no go,,,,AND NOW WE HAVE GOLD....

    The European Gold Confiscation Scheme Unfolds: European Parliament Approves Use Of Gold As Collateral

    Wonder why Europe is pressing so hard for Greece (and soon the other PIIGS) to collateralize its pre-petition loans on a Debtor in Possession basis? Here is your answer: "Yesterday’s unanimous agreement by the European Parliament’s Committee on Economic and Monetary Affairs (ECON) to allow central counterparties to accept gold as collateral, under the European Market Infrastructure Regulation (EMIR), is further recognition of gold’s growing relevance as a high quality liquid asset. This vote reinforces market demand for a greater choice of assets that can be used as collateral to meet margin liabilities." Luckily for Greece, it has 111.5 tons of gold in storage (somewhere at the New York Fed most likely). Looking down the road, Portugal has 382.5 tons, Spain 281.6, and Italy leads the pack with 2,451.8 tons.


    I guess because it's worthless?????????

    Buy gold, buy silver...phuck them!

  7. Dave when Gold is $5k/oz, how much will a loaf of bread, a dozen eggs and a gallon of milk cost?


  8. Welfare state democracy is sure to destroy the dollar

    "Welfare state democracy is incompatible with sound money, in our opinion. As just one example, we refer to a recent research study flagged by Pimco: 'The Liquidation of Government Debt,' by Carmen Reinhart and M. Belen Sbrancia. It concludes that 'the annual liquidation of debt via negative real interest rates amounted on average to 3% or 4% of GDP per year ... which quickly accumulated (without compounding) to 30% to 40% of GDP debt reduction in the course of a decade.'

    "In other words, an essential mechanism for servicing sovereign debt has been the devaluation of investor claims by capping interest rates. That amounts to outright theft of wealth by government from its citizens and more recently non-U.S. investors.

    "Negative real interest rates, less obvious than CPI inflation, are the stealthy pillar of welfare state finance. Gold prices correlate inversely with real interest rates, as we have been suggesting for the past decade. This relationship is one of the most reliable indicators of the macro climate for gold. Negative real rates ought to be a flashing green light for capital to seek out gold."