What if gold does go to $5,000 or $10,000?
What if gold does go to $5,000 or $10,000? by Lobo Tiggre for KitCo News
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With gold hitting nine-year highs this month—and staying above $1,800—readers are asking for guidance on what to do if gold not only reaches new nominal highs, but blows by $2,000 and keeps going. What if it really does go to $5,000 an ounce, $10,000… or higher? And what if silver hits $100 and keeps rising?
What are our endgame strategies?
Before answering these questions, we have to think about what the world would be like if gold were flirting with 5-digit prices, and silver with 3-digit prices.
We can only guess, but it’s not much of a stretch to say that such prices imply a high-inflation environment in the US.
Such gold and silver prices would make it so by definition. But I mean more than that. I think we’d be seeing 1970s-style stagflation, and there would be great political and social unrest. I think it’s unlikely someone with the guts Paul Volker had would step in to set things right. And I think there’s zero chance today’s politicians would give such a person the power to do so.
In other words, I don’t think $10,000 gold would be the end of the story. If it does rise that high, I think the US would fall into a true hyperinflationary death spiral. At that point, the price of pretty much everything would be about to take off. At the same time, the actual value of many things would go into decline as people focus their spending on survival.
In short, the real endgame would be a major financial and social reset—after a collapse.
I hope I’m wrong.
Or, if I’m right about what $10,000 gold implies, I hope we never get there. Just reaching Bank of America’s now-famous $3,000 call would be more than enough to make fortunes for gold bugs like me. No need to wish for far greater misfortune befalling the rest of the world.
But frankly, with the Republicans joining the Democrats in pulling out the control rods that keep the US economy from overheating and melting down… well, I don’t want to predict a global collapse , but I think it would be foolish not to make contingency plans for the possibility.
Bearing in mind that all of the above is just my guess—I’m not going to glorify my guesses by calling them projections, estimates, or forecasts—there are some important things to keep in mind as we plan ahead.
The end of fiat currencies
It’s one thing for Zimbabwe or Venezuela to unleash hyperinflation. It’s quite another for the US to do so. To the degree that mainstream analysts and forex traders think about this at all, I think most assume that the euro, the yuan, or maybe some other currency like the (highly regarded for historical reasons) Swiss franc would take over as the world’s reserve currency.