Gold Group’s John March lays out the chances of hyperinflation and that physical gold is a good way to protect against it. He predicts $1,500 – $1,600 gold by year end.
What if the purchasing power of the dollar falls dramatically? What if the relationship between gold and the USD re-calibrates to the ratio of 1980? Here is an interesting video that looks at this in detail. It’s actually quite scary but the points are well argued.
Jim Rogers gives his thoughts on what is likely to happen by the end of 2010/start of 2011. It’s quite interesting and some great points are made. This indicates that commodities and gold could be a safe place to be if global currencies collapse.
How high can gold go? Most believe this depends on the effect of inflation. However, we are not likely to see this for at least another 2-3 years. There is no denying that the super low interest rates set by the Federal Reserve, European Central Bank and the Bank of England has dramatically increased the money supply. When you consider the extended period for which these low interest rates have been held, inflation seems a certainty. These central banks need to put the brakes on quick.
Also, central banks worldwide are becoming net buyers of gold as opposed to net sellers. This has put upward pressure on the gold price. Look, globally $12 trillion in stimulus has been created. Most of this is yet to be spent. When it is we are likely to see inflation in most areas. The case for $5,000 gold is looked at in detail in this excellent article on commodityonline.com.
It seems that the fundamentals indicate a bright future for gold.
