Capitalism Magazine

A Precious Metals Bubble?

Fri, 23 Jul 2010 20:21:00 +0000

From my vantage point, the choice between gold and silver is of secondary concern. Investors should be more wary of clinging irrationally to an anachronistic US dollar regime.

Steven Handel

Sat, 24 Jul 2010 17:51:24 +0000

Peter Schiff is a straight-talker and we really need more people like him running for Washington. I wish him the best of luck in his senate race for Kentucky.

It really bewilders me how neoclassical economists ignore the inherent flaws of a fiat currency, deficit spending, and inflationary monetary policy. Any good economist/investor can see this game is unsustainable. No wonder people are investing in precious metals as a hedge against unstable money.

Mark Wallace

Sat, 24 Jul 2010 18:30:29 +0000

No, that's Rand Paul (Ron's son) in Kentucky. Peter is running for the Senate from Connecticut.

Brian Martucci

Sat, 24 Jul 2010 20:17:57 +0000

I agree 100% about profligacy of governments the world over. And I agree that debts cannot be accumulated forever and that the governments will simply print more currency to fix it.

But if people have lost faith in governments and paper currencies, why are bond yields plummeting due to people piling into bonds whenever stocks seem risky? Why are interest rates so low? Why are governments still able to pawn off more debt onto individual, corporate, institutional and sovereign buyers?

I believe that gold, along with all other asset classes, will deflate to a degree that no one would believe if I quoted the #'s. However, when the reset button has been hit on the entire world economy, "then" I believe there will be a run on metals.

But until we reset prices drastically, it will be human nature not to believe in the undoing of world governments, it will be second nature to hang onto dollars to payoff debt and get lean, and only in the very end when people capitulate and see that governments let us down again (as they always do in history), then and only then will there be a run on metals by people looking for an alternative to failed governments and fiat currency.

The word of the day, for ALL asset classes, in my opinion, is DEFLATION.