$5,000 Gold?

Author: Ernie Fitzpatrick

Author: Ernie Fitzpatrick

As we moved into the 21st century, I started forecasting gold would go to $1,500 in a few years. Gold had just gotten up off the floor ($250 an ounce) and was beginning to show signs of life. Of course the investment community hates gold and reminded people that gold was once at $850 an ounce, so it was a bad investment. Gold is too SOUND for Wall Street! :-( When it became obvious that the Obama administration was going to take a SOCIALISTIC approach and use the economic crisis as an excuse to take over more and more of the capitalistic turf, I moved my prediction on gold from $1,500 an ounce to $2,500 an ounce.....provided the U.S. didn't default before then. We've done nothing but move head long into a default mode; however, I can't believe that the "powers that be" are that stupid! Thus, let's subscribe to a wild conspiracy theory or maybe just a common sense approach to the trillions of dollars of debts that the United States is building up that cannot be paid off by any manner of taxation. And since China, the new 800 pound gorilla on the block owns close to TWO TRILLION in worthless U.S. treasuries, they surely don't want to see a default. The slow death by a million cuts (which is what's going on currently with the US$) is their death of preference. But, let's consider this thought. The US Treasury has a declared hoard of 261.5 million ounces of gold. What if we quit pretending that it was worth $35 an ounce (you know, we go real about life and valuations) and we priced it at "market". But, before we do that, let's add another piece to the puzzle. According to the US Dept. of Treasury (as of 2008) the value of US currency and coin in circulation is 85.2 billion dollars with 70% of this being located outside of the US. If the US Treasury were to back the total of US dollars in circulation worldwide with its 261.5 million ounces of gold; that gold would be priced at 3530 dollars an ounce. However, if gold were to reach 5000 dollar an ounce, and with circulating currency at 923 billion, that would seem a propitious time to announce a new monetary policy. Can we do that? Can "they" do that? You betcha! At $5000 gold the Treasury's gold would be valued at more the 1.4 times the existing dollars in circulation. The US could then proclaim that it would redeem these dollars at the market price of gold, whatever that might be. That would still leave the Treasury with approximately 384 billion dollars in gold if the market price were $5000 an ounce. Works for me, especially if I own some gold coins, currently at $1,150 an ounce (which is up $308 an ounce) over the last twelve months. Hey, that's a 36% return in a year. You doing better?About the Author:

As a spiritual-futurist, I have a BA degree majoring in history. One cannot know the future without knowing the past which holds clues to what is on the horizon. The world is in such a rapid expansion of knowledge that we are close to entering a tipping point that will forever change earth as we know it.

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