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Book Review: Nick Barisheff’s $10,000 Gold

by John Rubino on May 24, 2013 · 9 comments

One of the many scary things about writing an investment book is the six months that elapse between the typing of the last word and the book’s appearance in stores. That’s enough time for your predictions to be proven wrong or – nearly as bad – for your predictions to come true and make the book’s advice obsolete.

The temporal jury is still out on Nick Barisheff’s $10,000 Gold. Either it will be this generation’s Dow 36,000, a signpost marking a secular top, or a prescient and gutsy call for faith in gold’s fundamentals at a time when many are giving up on precious metals.

The latter is more probable, for reasons that Barisheff, CEO of Canadian gold dealer Bullion Management Group, spells out early on. To hit just a few of the high points: the developed world is grossly over-indebted and is holding a 1930s-style depression at bay with insanely-low interest rates and unprecedented amounts of newly-created currency. In response, the developing world, led by China, India and Russia, is buying up every bit of gold they can get their hands on, with an eye to the inevitable changing of the currency guard when the dollar, euro and yen are depreciated to nothing and the yuan and ruble rise to take their place. This dynamic, says Barisheff, will send gold soaring – though of course it will actually be gold sitting still and the dollar plunging.

As a gold dealer, Barisheff is at his best when clarifying the differences between paper gold like ETFs and unallocated storage and the real thing like coins and allocated accounts. This paper-versus-physical distinction has become front-page news recently, and is a crucial piece of information for new gold investors. The time will come when millions of people who think they own gold find out that they really don’t. This book’s readers will avoid that fate.

In Barisheff’s analysis, the US is in the final stage before hyperinflation, with debt beginning to overwhelm the system while crucial needs like infrastructure are starved to pay for entitlements, overseas military adventures and interest. Here’s how he describes what comes next:

Stage 5 is hyperinflation, the worst economic phase of the fiat cycle, when currency becomes essentially worthless. Hyperinflation has occurred fifty-six times since 1795. During the Weimar hyperinflation, which we will discuss in more detail below, only gold was accepted as reparation payment. Of course, it is probable that a significant structural change will occur, likely involving the formal recognition of gold as money, in order to avoid hyperinflation on a global scale.

Where would gold have to be set to account for all the paper currency now circulating? That’s right, $10,000.

A final note about this book’s production values: The publisher, John Wiley & Sons Canada, has done a great job with the cover art, the graphs and the indexes, while Barisheff’s presentation is clear and logical. This is a polished production from beginning to end, which makes it an easy read. Everyone associated with it should be proud of what they’ve produced.

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  • Dimarco

    Would you provide a SILVER prognostication? Silver’s story looks to be more interesting than GOLD…IMO ;o)

    • silverengineer

      Nick will not but I will. I expect when gold is $10000 that the
      gold:silver ratio will be in its historical range of 15:1. The silver price would thus be near 10000 / 15 = $666. They don’t call it the devil’s metal for nothing. :)

  • Mike

    So that means…another..US $ devaluation of 70-80 %..just like 1933
    If gold is NOT money,Bernanke why then is it trading on the FX platform of Etrade/now Saxobank..??
    The only reason the British empire gave up India and the other colonies, was apart from not having enough soldiers, was that the futures markets are MUCH better at stealing a country’s natural resources. Today mining company and banks can just sell future production to oversupply the market and depress the price and also actually “create” a loss to avoid taxes. I suggest that South Africa and other major recourse countries demand the actual real metal at the price the crooks are claiming to dehedge to prevent the looting of the country.
    No sane commodity dealer would dump 100+400 Tons of gold on a Sunday night if he was on a commission of the profits, rather it would seem that he is in on a % of the losses created.
    ? HOW much gold has South Africa sold over the years, and yet the are still in debt to banks and will always be debt slaves.Would they be poorer today, if they had not raped their country of untold riches.
    Wealth is to be without debt, not selling more recourses than you need just to pill up Fiat paper, to buy bonds…eg Norway…and Saudia Arabia, that apparently don’t want/need democracy.
    Fiat banking is much more efficient than slavery, as people happily pay interest on money created out of thin air.
    The official gold lease rate is 0,5 %…I would certainly like to borrow gold at half a percent, but let me guess, thats only for the insiders/Bullion banks.
    I wonder how Rio Tinto will cover their short positions from the Bingyon collapse and Barrick from their Peruvian mine 4000m + in the mountains, now with a Goldman sachs man in charge.
    Only people from Zimbabwe,Island and now Cypress understand the difference of storing savings and pensions in gold and silver outside the banking system.
    My friend Greshams law has already predicted that the IMF plans to put gold in the basket together with Fiat paper money will not work for long,

    The real question is if the Brics really want a fair system, or do they just want to take control of the current system of fraud.

  • Jason Carter

    Martin Armstrong made the point that hyperinflation cannot occur in a core economy with the reserve currency. I suppose moderate to high inflation for a time is possible but are other countries willing to face such a politically destabilizing event in order to keep their currency semi-pegged to the dollar?
    I would say severe deflation/deleveraging is probable during the next market crash (2015-16?) followed by “the great print” from central banks worldwide. The question is how long can the U.S. maintain interest rates below the rate of inflation?

    • Bruce C.

      It’s important to understand that Armstrong’s conclusion that hyper inflation can’t occur with a reserve currency fails to distinguish between those reserve currencies backed by tangible assets (namely gold) and those that aren’t. Those that were muddled along but the jury is still out on the other kind. The US dollar is the first and only “reserve currency” in history that hasn’t been backed by gold. Maybe military might is the equivalent, but I doubt it.

  • Willy1964

    $10.000 gold ? The poor old sod is obviously talking his book. Gold could reach $ 10.000 but then that would indeed signal Hyper-Inflation. But I expect gold to down to say $ 1000, $ 800 or $ 500.
    And I wouldn’t be surprised to see the US 10 year yield to go down to say 1%.

    “Hyper-Deflation requires Hyper-Deflation”
    “Hyper-Inflation is a political choice”

    Hugh Hendry.

  • Agent P

    Much of the negative commentary surrounding the importance and price direction of precious metals has to do with a U.S.-centric, and rather myopic view of the world landscape today. It is as if because the $USD happens to be the world’s reserve currency, that the entire economic universe revolves around that dynamic. It is likely that the future rise of gold and the De-mise of U.S. importance and influence on the world stage will not be due to our own devices, rather, it will come as a circumstance of foreign policy which in turn, forces other powerful nations on the global stage to withdraw from wholly transacting in $USD. The ‘noose’ as it were, is already being fabricated with various trade agreements outside the $USD, continual military build-up from the new Soviet Union and the ever-lasting spirit of Mao’s China, and myriad purchases and agreements with producing countries worldwide. The people who laugh at the importance – and price of gold, better get in all the laughs they can, while they can. Our comeuppance doesn’t reside within our borders, and that is where the cock-sure gold-bashers make their fatal mistake.

    • http://www.nomadcapitalist.com/ Nomad Capitalist

      Excellent points about the myopic world view that all too often shapes the debate.

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