Gold Could Go to 'Infinity'
Posted in the Minneapolis Forum
#1 Jun 24, 2013
"Well you know if you look at the last 13 years it was up 12 out of 13 and this year isn't even over yet, so I would say its responded pretty well. But you might say well yeah what about in the last year why hasn’t it? Well, markets do these things they go up sharply and sometimes they take a rest. But the long term is something you can get a handle on, but I was never very good on short term, whether it’s the stock market or whatever, or what government will do, they are just all over the place.
I think If you look at the record of the value of the dollar since the Fed's been in existence we have about a 2 cent dollar where gold was worth $20/oz.
I would say the record is rather clear on the side of commodity money.
And history is on our side, 6,000 years of history shows it maintains value while paper money self destructs.
I would say that long term as long as we have excessive spending and excessive computerized money you're going to see gold go up and eventually if we're not careful it could go to infinity while dollar could collapse totally.”
#2 Jun 24, 2013
A gold price of "infinity" might be hard to conceptualize, but Paul's point is actually quite simple.
He believes that "as long as we have excessive spending, and excessive computerized money, we are going to see gold go up," because the value of the dollar will be driven down. As each dollar becomes less valuable, it takes more of them to purchase an ounce of gold, meaning that the gold price measured in dollars rises.
Paul then takes it one step further. If Washington spending and Federal Reserve easing he refers to ends up toppling the U.S. economy and makes the dollar worthless, then no amount of dollars will allow an individual to purchase an ounce of gold. In that nightmare scenario, the price of gold (or anything else) in dollar terms is technically "infinity."
Because of these larger forces undergirding his gold thesis, the unkind short-term action in gold doesn't worry Paul.
"Markets do these types of things—they go up sharply, and sometimes they take a rest," Paul said. "I was never very good on short term, whether it's the stock market, or whatever. But if you look at the record of the value of the dollar since the Fed's been in existence, we have about a 2-cent dollar. And gold used to be $20 an ounce. So I'd say the record is rather clear on the side of commodity money."
"Six thousand years of history shows that gold always retains value," Paul added, "and paper always self-destructs."
If the U.S. dollar does indeed "self-destruct," then no one will be particularly happy. But as Paul points out, people who exchanged dollars for gold will certainly be glad they did so while they still could.
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