Could The Dollar Price of Gold Go to Infinity?
The comments below are an edited and abridged synopsis of an article by SchiffGold.com
This summer, Peter Schiff and Jim Rickards discussed the possibility of $15,000 gold. Economist Rafi Farber took this to the next level, arguing that the dollar price of gold could eventually hit infinity—meaning that the value of the dollar will go to zero.
During the interview presented here, Peter said the world is ultimately going to sever its relationship with the dollar. It will go off the dollar standard and back on the gold standard.
Rickards projected $15,000 gold by 2025. He said that if you divide the M1 money supply in dollars, euros, pounds, yen and yuan by the official amount of gold, you get about $15,000 per ounce. He said it’s a moving target because money is still being printed.
Farber argued that, even in the current global fiat system dominated by the dollar, we are still on a gold standard because gold is real money. When the dollar is devalued to the point that you can’t buy any gold at all, the dollar is effectively dead, and that could happen in a hyperinflationary environment.
Farber said that the dollar is heading in that direction, and that the dollar price of gold is going to infinity. He noted that, before the Fed came into existence, nobody invested in gold. They invested in gold mines, but not the metal itself, because they understood that gold is money.
Farber said that now is not a good time to invest in anything “except maybe gold and silver mining stocks, which will effectively be the world’s central banks after the dollar collapses.”
He also said that there wouldn’t be a global reset when the dollar collapses, although the powers-that-be will try.
Farber is talking about the worst-case scenario. But even if we don’t see a total dollar collapse, incessant money printing will continue to degrade the value of the dollar. That means the dollar price of gold will continue to rise over the long term.