Jonathan Chevreau says that Nick Barisheff is about to publish a book titled $10,000 Gold: Will it happen sooner than you think? (see the middle of the article). The article also included an opinion about gold being overvalued, which creates some balance, but I’d prefer to stay away from these predictions altogether.
My first reaction to seeing “$10,000 gold” was to remember the 1999 book DOW 36,000 by authors who would rather remain nameless. Apparently, everyone had to pile into stocks or miss the 3-5 year ride on the DOW from around 11,000 in 1999 to 36,000. It’s now 12 years later and the DOW is still at around 11,000.
The only reason a book like DOW 36,000 made it to print with some likelihood of success is that in 1999 stocks had been on a terrific tear, and people wanted to believe that the party would continue. The same is true for a book today about gold reaching $10,000.
Apparently, Barisheff believes that a $10,000 gold price “could be justified.” I have little doubt that gold will eventually reach this price, if for no other reason than inflation. It’s also possible that the gold party will actually continue driving the price to $10,000 in a few years, but don’t count on it. Another possibility is that gold prices plummet as they did in 1980.
Another scary possibility for owners of gold is that the world starts to value gold for its practical and cosmetic uses rather than just having an irrational desire to own it. Gold owners rarely actually do anything with the yellow metal. The same could be said of stocks, but at least stocks are part ownership of a business that actually does things to make money. Gold just sits there.