Tuesday, October 20, 2009

$8,000 Gold?

Bloomberg Oct 19th - key excerpts below

John Williams:

Gold would need to rise more than sixfold to top the 1980 record, using a more accurate inflation-adjustment, said John Williams, an economist and the editor of Berkeley, California- based Shadowstats.com. He said the government has understated the cost of living over the past two decades with adjustments in the way it measures the basket of goods and services monitored by the U.S. consumer price index, or CPI.

Gold futures for December delivery closed Oct. 16 at $1,051.50 an ounce on the New York Mercantile Exchange’s Comex division, gaining for a third straight week.

“If the methodologies of measuring inflation in 1980 had been kept intact, gold would have to hit $7,150 to be the equivalent of the 1980 record,” Williams said.

James Turk:

At Jersey, Channel Islands-based GoldMoney.com, which held $759 million of gold and silver for investors as of Sept. 30, founder James Turk said bullion can climb eightfold based on the historical relationship between the metal and the Dow Jones Industrial Average. The Dow is up 10-fold since January 1980.

Gold and the Dow, which has gained 14 percent this year to 9,995.91, were at about the same level during the Great Depression and the early 1980s, he said. On Jan. 21, 1980, as gold futures surged to $873, the Dow slipped to 946.25.

“The dollar is constantly being debased and inflated,” Turk said. “By 2013, gold is going to be at $8,000 and the Dow will be at 8,000.”

Additional Viewpoints:

Randy EconomicRot:

Back in Jan of 2008, before the US money supply exploded, I targeted an upside potential of $5-6K - see linked article: Gold how high?

Peter Schiff:

Schiff's July 2008 Video: $5000.00 Gold by 2012 - Dollar never recovers


If we experience a US dollar crisis and/or hyperinflationary blowout, all bets are off and not even the sky will be able to contain the future price of gold - can you say million or billion dollar gold?

Zimbabwe example

Zimbabwe: inflation rate hits 11.2 million %

A mere 2 months later and the Zimbabwe currrency collapsed/was no longer accepted: Zimbabwe - Gold for bread

It'll never happen you say - well think again:

Hours from Global Collapse - Electronic run on the banks



jerry said...

This is off topic but Karl Denninger of Market-Ticker has finally come out with a call to boycott Wall Street!!


I have been saying this for a couple of months and even posted two Youtubes about this idea. The Youtubes have gotten little attention, but Karl D. has finally come out and has repeated the call.

This is the only way to shake up the entire mess.


FOFOA said...

Hi Randy,

This is why I like to separate the issues of gold's breakout (what I call the emergence of Freegold), and hyperinflation. I see them as separate (although connected) non-interdependant events.

So I like to think of gold's breakout in terms of today's dollars. In terms of a rise in today's purchasing power. When you add hyperinflation (or even inflation) into the mix, you get confusion. People say "what good will $10,000 gold be if milk costs me $30 a gallon? A stupid question to be sure. But also wrong-headed.

I see gold's breakout, its separation from "fractional reserve" paper trading, delivering a rise in today's purchasing power on the order of between 1 and 2 orders of magnitude. Then, of course, your newfound purchasing power will hold steady no matter where hyperinflation takes it. Like you say, billion dollar gold? Actually, at that point no amount of dollars will get you any gold!

The numbers that Turk, Williams, Schiff and others predict, I view as happening within a functioning paper market, if it lasts that long. But once that breaks, there will be a gap up in physical that exceeds their expectations... in my humble opinion of course.

Anonymous said...

I'm with the high projections long term, but I can't get rid of the feeling that its gonna sell off soon for the short term. Every week on King World News, Ted Butler and Gata keep reporting ever increasing short positions in gold & silver futures contracts by JP Morgan & Goldman. They are going to take the price down again like last year, maybe not as extreme, but something significant. I have been waiting for this to happen so I can load up on more silver (Goldmoney). I know we keep hearing about the Bejing put, but don't you think China would like to see a lower Gold price too so they can buy more for all the dollars they are stuck with? I guess I may be paranoid but I am waiting to see what happens after a significant stock market correction.

Anonymous said...

I just read "Surviving the Economic Collapse" by Fernando Ferfal Aguirre. His experience in Argentina makes sense, especially that they were in denial about the collapse of the currency, seizure of their accounts, and ultimate use of gold and silver to store value. Right now all the stimulus is like pusing on a string and there is no inflation - for now.

Randy said...

Thanks for the link Jerry - I'll take a look at it tonight. Haven't heard from you in awhile - I hope all is well.

Randy said...


"in my humble opinion of course"

What the hell are you talking about? You're sir are the new gold master!!! :)

Thanks for stopping in to share your astute thoughts.

For those of you who haven't already done so - I suggest you click on FOFOA's blue name (above) and check out some of his articles - they are going viral and opening eyes across the globe!

Randy said...

Anon 2:02,

Agree (short-term) we will probably see a price correction... Yes, Dollar is oversold, Gold is overbought, S&P/DOW are in record overbought territory, etc.

I too (if correction happens) will likely take the opportunity to trade a few more of my Charmin fiat paper dollars for the "Golden Asset" that has helped individuals maintain their purchasing power for > 5,000 years.

Randy said...

Anon 4:07,

Here are a few video clips related to Argentina's collapse:

Argentina's Economic Collapse - our future?