I would rather invest in gold any day over holding even a single US Dollar. While I do not see a sudden collapse of the greenback, I do see that it can’t possibly hold its value in the long term. It seems clear that all of the powers of the world have agreed to significantly devalue the US Dollar.
Over the next couple of years of “orderly decline” I expect that the US Dollar will lose its role as an international currency. The Euro will assume that function.
6 Billion People on this Planet, 5 billion ounces of gold ever mined.. Not enough for every human being to ever have one ounce (incl Central Bank reserves). Yet US dollars can/have been printed to infinity in order to fund wars and entitlement programs and you’re saying Gold not likely to go over $1000?!? CNN needs to hire somebody who knows what they’re talking about.
You’ve missed the boat again Paul. Rather than take equity and portfolio advisors at their word, maybe you should dive into the fundamentals of why the dollar is in free-fall. Gold hitting 1000 is a foregone conclusion. I expect it to go much higher, as our currency is debased by an irresponsible Fed and skyrocketing entitlements.
As a previous poster mentioned, your work is best viewed by the contrarian investor. My portfolio certainly attests to that:)
dollar will race down based on following fact:1)budget deficit and trade deficit; 2)mislocating resource(in war not production); 3)prefer playing with money not in generating real wealth; smart guys go to wall street not science and technology; 4) This country reward lazy people, more socilaist country under the cover of capitalist country. Too bad nobody can change it
The PPI came in at 1.4% for May. Thats a 16% annualized rate of price inflation. Fed rate is 2%, so real interest rate in the US is -14%. Why anyone would own USD over gold is a mystery. Why anyone would own USD over a shed full of baked beans is a mystery. There is no turning back now–Fed will inflate forever because they are too politically influenced to cause a recession.
Of-course gold will be the big long term winner. With the US economy stagnating and broad money peaking, more money for a constant amount of goods and services means growing inflation. Gold supply grows at 1.5% per year, slower then the world economy, so less gold each year for a constant amount of goods and services, means prices will ultimately deflate in gold terms. Maybe not tomorrow, but in the long term, yes. Very safe bet!
Gold going to $1000 and beyond is as close to a sure bet as you’ll find. The fundamentals all point that way: a huge current account deficit, a huge trade deficit, a huge budget deficit, tens of trillions in unfunded entitlement obligations, the Fed’s willingness to bail out every firm run by idiots, the US dollar continuing to drop because of all of the above, and decreasing production. You should have at least 15% of your portfolio in bullion, but don’t expect to hear that kind of advice from the permabulls whose mouths spew received wisdom and ingest commissions.
Some people are unable, tainted, or refuse to recognize the fundamentals. Enjoy seeing the neh-sayers out there because that means we have a long way to go.
I’ll put my money on gold rather than US$ as long as the Fed keeps bailing out investment firms and banks (to the tune of $22B/day according to the lastest numbers) and as long as Congress keeps spending like there is no limit. Our economy is built on debt and that debt is not sustainable even though Bernanke is trying to prevent it from collapsing. There will be many more bailouts of both financial institutions by the Fed and corporations and GSEs by the government (GM,F, FNM, and F are prime candidates). Furthermore, as we go deeper into recession (which morph into a depression) the Federal budget deficits will mushroom since the expenditures will increase and the revenues will decrease. If the cost of the wars and the money taken from SS is included in the deficit, we are already approaching $1 Trillion deficits. In the end the US$ will be virtually worthless. But the same is true for other currencies which are rapidly being devalued by too much printing. Oil and gold are reacting to the same thing: too much liquidity from the Fed which is being put into commodities rahter than the busted housing bubble or the busted stock market bubble. Oil and food are also reacting to supply issues (we’re running out of oil). Gold will be a safe haven as the debt implodes and as the Fed keeps adding liquidity.
One of the dangers America and the world faces is hyperinflation. Gold will be a good bet if Ben allows the ball to bounce in that direction
I agree with Dave (From Washington) the Fed. is in a real serious bind. on the one hand rapidly accelerating inflation is now a given. Asia and a wide number of other countries are already experiencing 15-25% inflation rates, energy is costing more all of the time (The trend for decades.), food is increasing and will see another shock this Fall when the floods overseas and in our midwestern states show a sizeable reduction in production. China makes many of our products (We’ve been sold out by execs fattening their wallets)so it’s not too difficult to understand that as their prices rise 15-20% the products they make for us will also rise.
Seems like all we have to do is tackle inflation, right ? Ah, not so fast. to do so will require us to raise interest rates to support our currency, and that my friends is a gamble which could lead to a financial calamity. People are already tapped out. 8% have had their lights turned off, the majority have over #10,000-15,000 in debt, foreclosures are rising, their equity in their homes is dwindling quickly and in case you are not watching our economy is accelerating the layoffs which are coming. Just look at GM. 250,000 employees, and probably another 1-2 million jobs which support the needs of these people (banks, restaurants, etc..)These layoffs and cutbacks are still coming. How many cars do you think we are going to “sell” in the next 1-2 years (Answer: less and less)
Higher interest rates will not make this picture any better. Factor in the middle east, hurricane season, public fears (does anyone remember how fast there were runs on a number of banks with the last bank failure??) And of yeah, stock margin rates are being raised, the stock market continues to slide,regional and international banks will be impacted next (although the international ones don’t provide the transparency we do – so a surprise could be coming) Then what about other industries and investment groups which will be impacted after that.
Get the point here. We and the Fed is boxed. They may talk tough, but they can’t take any action until they address the financial crisis and the foreclosures. (I believe through inflation which then allows people to get out from homes with negative equity.)
Bottom line: The Fed will be playing whack-a-mole for 2 yrs. (First fighting deteriorating health of our banks and then inflation.) If they do it well, we’ll fluctuate back and forth with lower levels of inflation and loweer levels of growth.
That tells me Gold is precisely where you want to be. In the last inflationary period people valued the dollar, but guess where international people are going to put their money this time? (Hint: I’t not in a declining dollar which still has no plan in site.)