Is Gold Cheap at $2,000 An Ounce?
The comments below are an edited and abridged synopsis of an article by InternationalMan.com
As radical sounding as it may seem, Doug Casey considers this article to be conservative. Gold at $35 in 1971 was artificially low, suppressed in price by the government. And in addition to M-1 and M-2, there are tens of trillions of dollars held outside the US that will come home to roost if there is the Misesian crack-up boom discussed here. It’s an important point not often mentioned, but it will be a real factor in the not-too-distant future.
Spot gold moving higher is a historical event that implies more than a nice round number on the price of a commodity.
What lies ahead is a disorderly change in the world’s monetary system, one that will bring back gold as the lynchpin around which world commerce functions. For more than 100 years, gold was viewed as a barbaric relic, but it will rise like a phoenix from the ashes of the US dollar and other fiat currencies.
Many commentators have pointed out the similarities between what is happening today and what occurred during the stagflationary 1970s and the Great Depression of the 1930s. What we will experience is a combination of the two.
Consumer price inflation will be much higher when compared to the 1970s, and the GDP contractions are going to be more pronounced than during the 1930s. In fact, the 2019 US GDP of $21.4 trillion will not be eclipsed, in real terms, at least for another decade, if not for a much longer time span.
What lies ahead for the US economy is not a V- or a W- or an L-shaped recovery, but a downward spiral that could lead to an abyss. On the current trajectory, that is the most probable outcome. Barring dramatic changes to monetary and fiscal policies—the exact opposite of what has been pursued over the last few decades—the US dollar would not only lose its status as the world’s reserve currency, but would more than likely meet the fate of the Continental.
Up for discussion: the Misesian crack-up boom, and is gold cheaper at $2,000 in 2020 than it was at $35 in 1971.