As much as I agree with this article, and as much as I respect Nick Barisheff, I don't see gold at $10,000, at least not in the sense you see it today: traded on exchanges and available through dealers. I think it's more likely that at some point governments around the world will simply confiscate gold the way FDR did in the 30's. Why? Because as confidence in fiat collapses so too will world trade, and since world trade is essential to everyone's economy, international settlement will revert to gold as it was under Bretton Woods, only this time without the dollar peg.

I believe China will lead the way, and I see their freeing up and encouragement of private gold holding as a back door for quietly accumulating enough to support their trade needs. I can also see gold-rich nations doing gold swaps with gold-poor nations in exchange for preferential trade status.

The backdrop for all of this would be a decline in world trade, since nations would only relinquish their gold for necessary items. Everything else would be domestically produced, which is the positive aspect that follows from all this - rebulding economies around local production and consumption. This will be helped along by higher oil prices which will have the effect of shortening supply chains. In other words, no more shoddy goods from China - they'll be made in USA and just as shoddy, if not worse, but you won't have any choice since imports will be too expensive.

One of the implications here is that you'd have a two-tier currency system. Internal transactions in fiat would continue, but any movement of capital across borders would be tightly controlled. You'd need the new trade dollar (or whatever it's called) to import anything from abroad (not to mention actually go there, or heaven forbid, invest) and those New Bucks won't come cheap. 10,000-1 doesn't seem too far fetched for the USA given the ruinous path they're on, so maybe that's how you get to Nick's $10,000 gold, but it won't be gold in hand. You'll get the New Bucks at whatever the going exchange rate, and some kind of international treaty will stand behind them to say there's actually that much gold on account.

Look at the path we're on: political lock-down, tighter social control, fewer personal rights, more government intrusions. How does gold circulate as a free currency under those conditions? Maybe in Barter Town in those parts of the world where law and order have disappeared, but only if you're part of the gang with the most guns. Force, not gold, is the currency of last resort. People living in peaceful times tend to forget that.

ebear