The Market Report: Could gold go to $10,000 an ounce? What would that mean for the economy?

Transcript

Mark Alyn: Welcome to the Market Report from the Birch Gold Group. Hi, I’m Mark Alyn. During this show we’re going to be talking about could gold go to $10,000, maybe even more. We’ll have somewhat of a friendly debate between Vince Miller from the Birch Gold Group, and Will Hart, also from the Birch Gold Group. There have been a lot of quotes lately. We’ve actually interviewed Peter Schiff who says gold is going to go to $5,000, and we have that interview on our website, you can listen to it. Jim Rickards has said gold will go to $7,000 to $9,000. James Turk says that gold is going to go to $10,000 an ounce. Vince, do you think gold is going to go that high?

Vince Miller: That is a very prolific question and of course the answer is a big question mark. I would say, could gold go that high? Of course. When gold was $150 an ounce, nobody thought it would go to $500. I remember when gold was $400 an ounce back in 2005 and nobody would think it go to $1,000. And, you know, guys like James Sinclair come out and he thinks gold’s going to $50,000 an ounce, you know, in the coming years by 2020. And James Sinclair, by the way, has an excellent track record in terms of calling the gold, he knows his stuff when it comes to gold. You know, he believes Cypress is the blueprint for other countries, including the United States, to confiscate people’s retirement accounts. Basically, it was a total of about an 83% decline in their economy. James Sinclair, this is a guy who, he predicted the gold prices, when they were about $350 an ounce, he said that gold would trade, by January 2011 at $1,650 an ounce. He predicted in 1974, when gold was $159 an ounce, Sinclair predicted that gold would top out around $900 an ounce in 1980 and hit $8,750.

Mark Alyn: He’s pretty accurate.

Vince Miller: Yeah, he’s been pretty spot on and now he’s going on to say by 2016, gold can go over $3,000 an ounce and by 2020, gold could be relatively $50,000 an ounce. Now that being said, look, I don’t have a crystal ball. Do I think it could happen? I mean anything is possible, but I would like to think that it wouldn’t. I honestly would like to think that gold would never hit $5,000 an ounce, Mark. It would be gold for gold only. It wouldn’t be good for anyone else. It wouldn’t be good for you, it wouldn’t really be good for me. Things would be very expensive, your dollar, which you’re still going to need because your still going to have to buy stuff.

Mark Alyn: You’re going to need wheelbarrows to crate the dollars in.

Vince Miller: Yeah, I mean what’s that Bible verse that says in the end times, a loaf of bread would buy a bag of gold. Or vice versa. So a bag of gold would buy a loaf of bread. And it becomes one of those very daunting questions: Would gold go to $5,000? Yeah, it could. The government seems to have a printing press at their disposal. They tend to print money at whim. I hope that it doesn’t go to $5,000.

Mark Alyn: Let’s go to Will, because I have a feeling you somewhat disagree with Vince.

Will Hart: Well again, I know everybody’s speculating, everybody’s trying to throw out their guesses of what they thinks happening. I really believe that gold’s going to continue to keep climbing steadily. I think, as I mentioned in previous shows, I believe that the fiat currencies are on their way out. I think that we’re going to go back to some sort of a gold standard and if that does in fact happen, well then, you can only imagine the value of an ounce of gold because the population, of course, on the Earth is a lot bigger than it was a hundred years ago. That being said, everybody has to have cash. They have to have some sort of form of currency to go in and buy their gallon of milk or pay their gas. And so if we have a gold-backed system, well there’s only so much gold out there, so it’s not like we’re turning salt water into gold. The little bit of gold that’s out there has to then be cut and divvied up amongst all the paper currency that would then kind of be that gold’s backing and so $10,000 an ounce is very plausible. And even higher if you’re basing it on, possibly, a global currency that’s backed by gold. Well then, the little bit of gold that’s out there, and I’m talking about the size of a football field, it’s not a lot of gold.

Mark Alyn: What would happen to the economy if the gold does go to $5,000 or even $10,000 an ounce.

Vince Miller: That’s a great question Mark. First of all, the U.S. and western economies would all face insolvency, instantly, simultaneously. I think that the entire Western industrial, commercial, credit economy would just instantly fall apart, so fast that it would make your head spin. I think the supply chain would stop and stores would really empty quickly. I think, possibly, the U.S. dollar would fall probably by 50% in maybe a week’s time or less. It would be catastrophic. I think that there would be worldwide panic. Worldwide currency panic would set in. China would have probably a revolution. The Asian countries would fare horribly in a situation like that. And it’s interesting, we saw a taste of what this could be like back in May in 2012 when there was a run on the Greek banks when everybody thought that the Euro was going to crash. In one day, Greeks withdrew $895 million dollars out of Euros. And at that time, I remember, gold and silver obviously shot up through the roof. But that was just one day and stock markets were tumbling all over the world. And a lot of it is because we’re all so heavily tied into each other.

Mark Alyn: We have world economy, not necessarily a U.S. economy, a China economy. We have a world economy. I mean we have the smaller economies, of course, the individual country economies. But we do have a global economy.

Will Hart: Absolutely, we’re all tied together. What happens here is affected over in Europe and Asia. When something happens over there, we’re seeing the implications here.

Mark Alyn: It’s the butterfly effect.

Will Hart: Absolutely, we’re all tied together. So, again, if there was to be some sort of a revaluation or to exchange some sort of currency, I think it’s not necessarily maybe the way Vince was putting it where we’re seeing fires in the streets. I think it will be a little more orderly in the sense that, again, kind of what I’ve mentioned before in previous shows, is that Germany, when their Reichsmark went belly up and they turned in ten Reichsmark to get one Deutschemark. It was you go to your bank, you turn it in and you’re like, “Yeah, I just lost 90% of the value of my portfolio. Darn it, if I knew this the day before I would have went out and bought a whole bunch of gold with it!” But, you know, a little too late. The good news our listeners have now is, it’s a lot more readily available to see what’s happening in the news, to kind of say, “Uh oh, I see that we’re heading for an iceberg. I better start making some preparation.”

Vince Miller: So, Will, you’re basically saying that I’ve converted you, changed your mind and now you agree with me, finally.

Will Hart: Well, somewhat.

Vince Miller: Because you disagreed with me and now you’re actually agreeing with me, I’m just letting you know that!

Will Hart: Well, again, if you’re saying that there is, kind of what you were mentioning as far as other countries and kind of what took place in Cypress and the panics that took place, yeah. But again, you don’t want to wait until the last second to make a move into gold and do something with your paper or your retirement dollars. At that point, when ship’s half sunk underwater, getting a seat on a lifeboat may not be as readily available as you maybe had hoped.

Mark Alyn: Let me wrap up by asking you both a last question. Merrill Lynch forecasts a $1,294 average with a rise to $1,350 by the year end, that’s 2014, for gold per ounce. It says that gold will underperform silver but that gold could trade as high as $2,000 an ounce by 2016. That’s much more a moderate point of view. Will.

Will Hart: I think that’s conservative. I think the first forecast, I think $1,350 by year end, I think that’s absolutely on track. I think that saying $2,000 in two more years from now, I think it’s going to be higher than that. I think that’s a conservative estimate. Based upon what I am reading and what I am seeing out there, people are waking up. They realize – and I’m talking about billionaires, I’m talking about countries stockpiling gold – you know, again, there’s only so much out there. So if everybody has it and no one’s letting it go, supply becomes an issue, demand is growing, I’m going to think that price is going to be higher.

Vince Miller: You know, it’s interesting, I was just reading something and it said that an estimated only 2% of American citizens actually own investment-grade gold.

Mark Alyn: Oh, wow. So now’s the time for people to consider adding this to their portfolio, not necessarily to make money, but to preserve the wealth they currently have.

Will Hart: Correct, yeah. You’ve got to go where the smart money goes. I mean countries and billionaires are doing it, why isn’t it good enough for you?

Mark Alyn: And it’s easy to do.

Will Hart: Extremely.

Mark Alyn: Alright. Gentlemen, thank you for joining us here on the Market Report.

Mark Alyn: If you have a question about buying gold. If you have a question about buying gold, if you have a question for us here on the Market Report, you can ask it by writing us an email, sending an email to info@www.birchgold.com. info@www.birchgold.com. You can also check out all the information we have at www.birchgold.com, www.birchgold.com. Lots of information, lots of articles, different points of view on gold, where it is and where it’s going. And of course you can also call to speak to one of our Gold Specialists by calling (800) 355-2116. That’s (800) 355-2116. Gentlemen, again thank you for joining us. Will Hart and Vince Miller from the Birch Gold Group. For the Market Report, I’m Mark Alyn. We’ll see you on the next episode.