$2,000 gold. A few years ago, that seemed like a crazy prediction. But with gold hitting an all-time high over $1,900 less than five months ago, that figure is very possible in 2012.
Of course, one person thinks $2,000 is just the beginning. Nick Barisheff, President and CEO of Bullion Management Group Inc., has his sights set on $10,000 gold.
His reasons? They are varied, but it all comes back to the fact that government-sponsored currency is worthless — and that gold is the only asset that will really have any value.
The only thing standing in the way? Ron Paul.
Barisheff heads a management company that offers mutual fund trusts and a bullion purchasing program. He regularly appears on CNBC, writes for finance publications and gives speeches to explain his bold call — and, of course, to tout his upcoming book with the apt title $10,000 Gold. He recently spoke with InvestorPlace.com to discuss precious metals and his bold prediction.
Q: You keep pretty busy talking about gold these days. Do you think people are more interested in gold now than ever before?
A: The interest is certainly growing, but it’s surprising how there’s little adoption. The bulk of investors have no gold in their portfolios, and the institutions have less than 0.3% allocations — that includes bullion and mining stocks. Even though it’s had solid performance for 10 years, it’s still not readily adopted by the public in general or by the financial community.
Q: So why do you think people are becoming more interested in gold?
A: Concerns are growing about the financial management of the economy, whether it’s the U.S., Europe or other countries, and the fact that governments are having to resort to continuously increasing levels of debt and … printing more and more currency. As you do that, the currency is going to be worth less and less in terms of purchasing power, and particularly against “real” money, such as gold and silver.
Q: Your upcoming book is called $10,000 Gold. Are you talking about 2012, 2013? This seems like it would have to be a long-term prediction.
A: This would be at least a five-year time frame. I’ve resisted doing predictions in the past for any long term, but what changed my mind is watching the U.S. debt ceiling debate. There’s no will to do what’s necessary. You’re going to see budget deficits running $1.5 trillion and likely increase year after year. That’s a huge amount of debt to keep compounding, and the issue that the U.S. is reaching is the ability to tax the people to reduce the deficit is dwindling or nonexistent. So the only course of action is to simply print the money. That’s how you get into the high-gold scenario — not that gold’s going up, but the currency will be devalued.
When you take the true debt position of the U.S. — when you add in the things like Social Security and Medicare — then you get the real national debt not being $15 trillion but $120 trillion. And when you try to put meaning against that, you find $120 trillion represents $1 million per taxpayer. Tell me: How that’s going to be paid back?
Q: Sounds like investors will have much bigger problems than their 401(k) statements.
A: Exactly. $5,000 or $10,000 gold isn’t going to be a pleasant society to live in. There’s going to be many other social problems to deal with — it’s not going to be that if you’re a gold investor, you’re living happily ever after. But you’d be better off having it than not having it.
Q: What’s the most important thing investors should know about gold right now?
A: Well, I think the important thing to understand is that gold is money. There’s a big deal of confusion. It’s also a commodity, and you can also look at it as an investment. But it’s been money for 3,000 years, and it still is today.
People say, “You can’t eat gold,” “You can’t put (gold) in your gas tank,” “(Gold) doesn’t pay any interest or dividends.” But if you put $100 bills in a safe, it’s not going to bear any interest or dividends, either. And that currency in your pocket doesn’t taste very good and it doesn’t work in your gas tank …
The difference is that currency in the safe is devaluating daily while gold has been increasing in purchasing power. So, in the case of currency you’re effectively losing principal value day in and day out, even if it’s staying in the safe.