Considering All The Guesses Out There,
What Will The Price Of Gold Ultimately Go To
- And WHY?
John H. (Jack) Weber
Where does one start when he decides to put his business career into words? Having never done that, I'm frankly at a loss to know where to start in a meaningful way for you. But, I sincerely hope you will find this article stimulating, as I relate what I believe are the most important topics concerning the 52 years I've been in the business of trying to help people with their investments.
One topic I need to cover will help me begin, that being my thankfulness for a web site like "gold-eagle." Since I don't pretend to "know it all," I truly appreciate reading the thoughts of others in the business of assisting those who don't have the time or talent to delve into such esoteric topics as gold and silver. So, thanks to all of you who have published your thoughts during the several decades that I've seen your contributions on this excellent website.
However, I have a bone to pick with those of you who have been trying to capture the attention of your readership by publishing your upside targets for the ultimate gold (or silver) price. After having begun investing into gold with a single St. Gaudens double eagle in 1960 for the outlandish price of $45 (that was a rather considerable premium, considering the "official" price for gold bullion at that time was $35), I had the audacity to overcome the objections of the owners of the stock brokerage firm with which I was affiliated, and began placing my stock clients into So. African gold mining shares (Kaffirs, as they were known then) in 1966. Thru interesting circumstances, Harry Browne (RIP) became aware of my interest in this market, and after several conversations with him, he decided to mention me in a footnote (page 165) of his first New York Times best seller, "How You Can Profit From the Coming Devaluation, in 1970. Such an "official" devaluation never occurred, but the several hundred readers of his who called and bought the shares I recommended, did very well, as we all sold out between 1/6 & 1/15 in 1980, with gold around $700/oz. You may recall that gold topped out at an intraday high of $885 on 1/21/80. The next day it closed at $670. I'm sorry I missed the exact top, but I had no complaints from any of my clients. Harry also mentioned me in a couple paragraphs of his second best seller in 1974, "You Can Profit from a Monetary Crisis," p. 329.
My main motivation for spending my time in publishing these thoughts for you is to point out that in none of the hundreds of articles I've read on this website have come even close to the ultimate price to which gold (and silver) will rise. One article I can recall (but can't find the printout I made) suggested that there are 74 different predictions, ranging from $4,000/oz to as high as $40,000, if I remember correctly. Well, I'm writing to tell you that they are all guesses and they are all WRONG!!!
Frankly, it won't surprise me at all if the IMF announces a new international currency that will be backed by some percentage in gold - at $30 or $40,000/oz. Such a step would buy the international bankers (read Edward Griffin's book; The Creature from Jekyll Island, for in-depth insights on this topic) considerably more time in which to gain total control of the monetary system of the world. I believe you would benefit from a short quote from Mr. Griffin's book, obtainable at 1800-595-6596:
"The United States government is mired in a 5.8 trillion dollar debt (keep in mind that this book was published in 1994, and that the debt is now allegedly over $14 trillion - does anyone really know - or care?). By 2001, interest payments on that debt were running $360 billion per year. That consumes about 19% of all federal revenue and costs that average family over $5,000 each year. Nothing is purchased by it. It merely pays interest. It represents the government's largest single expense. Interest on the national debt is already consuming more that 36% of all revenue collected from personal income taxes. If the long-term trend continues, there is nothing to prevent it from eventually consuming all of it.
"By 1992, there were more people working for government than for manufacturing companies in the private sector. There are more citizens receiving government checks than there are paying income taxes. When it is possible for people to vote on issues involving the transfer of wealth to themselves from others, the ballot box becomes a weapon whereby the majority plunders the minority. That is the point of no return. It is a doomsday mechanism. (As pointed out by Margaret Thatcher: "The problem with socialism is that you eventually run out of other people's money.")
"By 1992, more than half of all federal outlays went for what are called entitlements. Here is another doomsday mechanism. Entitlements are expenses - such as Social Security and Medicare - which are based on promises of future payments. Entitlements represent 52% of federal outlays. When this is added to the 14% that is now being spent for interest payments on the national debt, we come to the startling conclusion that two-thirds of all federal expenses are now entirely automatic, and that percentage is growing each month. (This means that all the political promises we're hearing from those who won on 11/2, are empty promises. Voluntarily reducing governmental expenses is a political and practical impossibility - and they know it.)
"The biggest doomsday mechanism of all is the Federal Reserve System. Every cent of our money supply came into being for the purpose of being loaned to someone. Those dollars will disappear when the loans are paid back. If we tried to pay off the nation debt (now at $100 Trillion, according to Boston University economist Laurence Kotlikoff), our money supply would be undermined. Under the Federal Reserve System, therefore, Congress would be fearful to eliminate they national debt even if it wanted to.
"None of this is accidental. It is the fulfillment of a plan by members of the CFR who comprise the hidden government of the United States. Their goal is the deliberate weakening of the industrialized nations as a prerequisite to bringing them into a world government built upon the principles of socialism, with themselves in control.
"The origin of many of the stratagems in this plan can be traced to a government-sponsored think-tank study released in 1966 called the Report from Iron Mountain. The purpose of the study was to analyze methods by which a government can perpetuate itself in power-ways to control its citizens and prevent them from rebelling. The conclusion of the report was that, in the past, war has been the only reliable means to achieve that goal. Under world government, however, war technically would be impossible. So the main purpose of the study was to explore other methods for controlling populations and keeping them loyal to their leaders. It was concluded that a suitable substitute for war would require a new enemy which posed a frightful threat to survival. Neither the threat nor the enemy had to be real. They merely had to be believable.
"Several surrogates for war were considered, but the only one holding real promise was the environmental-pollution model. This was viewed as the most likely to succeed because (1) it could be related to observable conditions such as smog and water pollution-in other words, it would be based partly on fact and, therefore, believable-and (2) predictions could be made showing end-of-earth scenarios just as horrible as atomic warfare. Accuracy in these predictions would not be important. Their purpose would be to frighten, not to inform.
"While the followers of the current environmental movement are preoccupied with visions of planetary doom, the leaders have an entirely different agenda. It is world government." Pages 534-536
If you've studied your Bible, you know why this will happen. Of course we don't know when, but it seems to me that it won't be much longer.
But, whether the IMF or whether just the US tries a gold backed currency (assuming we have any gold left in Ft. Knox), the paper currencies that are presently flooding the world economy will all eventually sink to the level of every unbacked currency the world has ever seen, namely ZERO!!! As John Exter was fond of saying: "Every unbacked currency is an IOU nothing. The only thing backing the paper dollar is confidence. When that goes, the dollar will be worthless." And, if you divide any number by zero, you get infinity - a meaningless number, but that is the ultimate price to which gold (and silver) is headed. It may not occur during my lifetime, but I'm totally confident it is a certainty during my children's lives.
While gold is our financial life preserver, silver is also an extremely important asset to hold if you wish to prosper. (Incidentally, my three favorite metals are gold, silver and, as a former law enforcement officer, lead) I encourage you to go back to gold-eagle to read an excellent article by Jerry Western: "Why You Should Hold Silver In Your Portfolio, As Well As Gold." In that article Mr. Western makes numerous excellent points regarding the merits of holding both gold and silver, but for those who can stomach the volatility of silver, wisdom tells us to get a substantial position in the white metal. But, the reason I refer you to his article is to reinforce his excellent enumeration of the 22 reasons he sees silver as the premier metal (go to: www.gold-eagle.com/editorials_08/western111410.html
to read them) for those who are seeking a superior return on their investment. The only disappointment in the entire article is a lack of insight as to why silver rose to $52/oz in 1980, which will not be repeated by the Hunt brothers in the future. However, there are many reasons to expect that the gold/silver ratio will return to the historic level of 15/1 instead of the current 53/1. Yes, storage is a problem, but well worth the effort.
Jim Sinclair said it all with this statement:
Dear CIGAs,
"What is happening in the economy is signaling enormous changes for the U.S. and the world. The scale of what the Federal Reserve is doing is unparalleled in human history. No country has ever produced so much money and so much debt in such a short amount of time. The Fed has embarked on another round of money printing (Quantitative Easing or QE2). It has been reported that it will buy $600 billion in Treasuries and another nearly $300 billion in mortgage-backed securities. In a statement nearly two weeks ago, The Fed left its plan of money printing open-ended. It said it would, "regularly review the pace of its securities purchases and the overall size of the asset-purchase program in the light of incoming information and will adjust the program as needed.
"All the fancy financial terminology and complicated skullduggery can be boiled down to a simple phrase or two. The dollar is being debauched at the hands of the Fed, and the massive debt and future commitments we owe will never be paid off in "real" money. Boston University Economist Laurence Kotlikoff says the real amount America is on the hook for is $202 trillion. For perspective, just one trillion dollars is a stack of $100 bills nearly 68 miles high!
"The Fed is trying another round of QE, even though the first installment of $1.7 trillion did not work to actually repair the economy. We spent another $2 trillion in TARP and other stimulus that was, also, supposed to fix the economy. It's a grand total of $3.7 trillion just in the last two years. (Some say it's more than $12 trillion spent or committed.) All this money printing did inflate stock prices. It also helped out the big banks. It worked so well they are paying a record $144 billion in bonuses this year. What did the man on the street get?-foreclosure fraud and higher unemployment (22.5% according to Shadowstats.com). Now, the money is running out, and the Fed is back to printing to keep the economy from falling off a cliff-again. Nothing has been fixed; the day of reckoning has just been postponed, but this cannot go on forever. At some point, the U.S. dollar will take a severe plunge, and inflation will hit America with a vengeance."
Hyperinflation is coming! Therefore, if you intend to survive financially (and leave something of real worth to your children and/or grandchildren), it is my firm conviction that you need to put into gold and silver, every dollar you don't wish to lose due to the hyperinflation into which we are unquestionably headed, regardless of the relatively high (based upon the past) current prices of those metals. Will the prices of gold and silver suffer dips in the months and years ahead? Of course, but if you're concerned about the rest of your life (and your heirs lives), what difference will those insignificant dips make? Frankly, any dips of 10% or more (which we appear to be experiencing currently) should be used to add to your holdings, assuming you have available funds at those times.
John H. (Jack) Weber
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