Appearing on CNBC, former Congressman Ron Paul warned that if the US continues on its current course, the dollar will collapse, and gold will literally be priceless.
“Eventually, if we’re not careful, it will go to infinity, because the dollar will collapse totally,” Paul said on CNBC.com’s Futures Now.
“As long as we have excessive spending, and excessive computerized money, we are going to see gold go up,” Paul urged, noting that as the value of the dollar is destroyed, everything measured against dollars will increase in value.
Paul added that recent drops in gold prices do not factor into the long term outlook. Apparently, he is not alone. Peter Schiff is the icon of a gold bug.
Schiff, 50, isn’t fazed that gold is heading for its first annual price drop in 13 years, or that Goldman Sachs Group Inc. has called it a “slam-dunk sell.” He predicts bullion will reverse its 21 percent year-to-date decline and probably surge 52 percent to reach a record $2,000 an ounce within a year.
That’s just the beginning: Before President Barack Obama leaves office in 2017 the U.S. will default, the dollar will collapse, hyperinflation will strike and gold will skyrocket, he says.
“I’m waiting for the dollar crash, I’m waiting for the real crisis to hit that I know will benefit gold,” Schiff said Oct. 18 over lunch of spinach-and-beet salad and stewed rabbit in the sun room after the radio show. “The longer it takes, the longer I have to wait for that payday. But the longer it takes, the bigger that payday is going to be.”
To hold interest rates low, the Fed will have to keep buying bonds, which means printing more dollars, Schiff said. Foreign countries use them to buy U.S. bonds — in effect lending the U.S. more money to pay back what’s already owed. Governments such as China eventually will balk, Schiff said.
“The minute China tells America, ‘I want my money back, I don’t want to loan it you again, just give me the money,’ then we default,” Schiff said on the radio. “The sooner the Chinese do this the sooner we can start fixing our economy, because the longer they wait, the bigger our problems get.”
Renowned gold expert Jim Sinclair says financial calamity is just around the corner for America. Sinclair contends, “We are facing the annihilation of currency. We are facing the shift of America as the leading and most influential nation of the world to some form of banana republic. . . . If it wasn’t for food stamps, we would be facing long lines of people waiting for free food.” For gold, everything hinges on the U.S. dollar, and Sinclair says, “I think the dollar gets hammered. I believe we are headed for hyperinflation.” One of the many black swans, according to Sinclair, is the possible abandonment of the U.S. dollar by Saudi Arabia. If Saudi Arabia stopped selling oil only in U.S. dollars, what would that do to the buying power of the buck? Sinclair says gasoline would be “$10 a gallon very soon, without a doubt.”
Sinclair predicts retirement funds and bank deposits are going to be taken by the government. How much of your money could you lose? Sinclair says, “In Cyprus, it was a total of 83%. . . . Cypress is the blueprint, and it’s what we are going to experience here in the United States.” Jim Sinclair, who has just accepted the position as Chairman of the Advisory Board for the establishment of the Singapore Gold Exchange, says, “The exchange will trade physical gold only and not future gold. . . . You have to make delivery.” Meaning, there will be no naked short selling or manipulation of this new market. Sinclair says, “This will emancipate gold from the paper price.” How high will gold go? Sinclair predicts, by 2016, “Gold will be $3,200 to $3,500 an ounce.” By 2020, Sinclair predicts, “Emancipated gold will be $50,000 per ounce.”
Are these people right? Are they giving good advice? Maybe, but there’s just one problem. You can’t eat gold. In fact, gold is only used to hold the value that will be lost by the dollar.
What about property? Well, what about it? Perhaps, owning rural or agricultural producing property may be one of the best ways to survive and prosper during this period. Don’t forget, a total collapse will not just bring misery, it will bring anarchy, riots, and looting.
While such an event is bound to wreak havoc throughout the world and cause an economic depression that will be written about in future history books, there are a few things that people will still need to survive at the most basic level: water, energy and food.
In that sense, agriculture is depression proof… even for the type of super-depression the world is expecting.
To add to the bullish case for agriculture is pure demographics. The world population has gone up nearly 700% in the last century. That is a lot of new mouths to feed, literally. That is really the only chart you need to see to make the case for rural or agriculture as a solid investment.
Farmland the world over is outpacing other real estate properties. For instance, in the United Kingdom, farmland is outpacing the price of prime central London property for the first time in 16 years. Predictions submit that the average price of an acre could soon hit a new record soon there. And that is in the decaying United Kingdom.
But, all over the world, there is not much arable land on the market. People simply aren’t selling. Owners hold onto arable land as a long-term investment, like precious metals.
After all, God did not promise Abraham gold. But He promised him land. For him and his descendants. The gold simply followed.