I was wrong: Gold's going to crash

Cody, You hold your stocks, bonds and dollars... I'll GLADLY hold my silver and gold. The economy will crash (actually already has... effective 18% unemployment), the dollar will become worth less (well on its way NOW), and virtually all stocks will go to ZERO (most likely starting the next down phase now). So worst case scenario, gold drops LESS than everything else and your gold (and I mean physical gold in you hand) will still be WAY AHEAD in value of most everything else. Gold is PAYMENT IN FULL. Gold is not an IOU like fiat currencies, Gold is an international currency. Gold is and has always been highly LIQUID. Everyone should PROTECT themselves NOW. The next big move up in gold is right around the corner. By the end of this year (2009) gold will most likely have a MUCH HIGHER value. What do you think will happen to the money supply as the perfect storm that has ALREADY OCCURRED passes overhead? Unemployment skyrocketing, tax receipts cratering, businesses bankrupting. The money supply has gone ballistic ALREADY!!! What do you think will happen in the months ahead when unemployment funds run DRY, tax receipts become a trickle, entire states default and the few people left with productive jobs give the government the FINGER when asked to pay their taxes. Its a JOKE, but its NOT very FUNNY. In fact, I do NOT hear anyone laughing where I'm standing! P.S. The bankers and financial MASTERS need to be hung like they were in the crash of 1890!

Cody you hit the nail on the head I'm just surprised it hasn't already done it $500/oz government must be holding up the value or maybe the Chinese. I think everything is in limbo right now and when America wakes up and gets mad everything will colapse and if they wait to long and keep spending it will be desasterous!!!!

Sorry Cody, I would rather have gold and silver in my hand than a worthless piece of stock in a company I have no control over. I will take my chances. Last time you will see any of my money in the market. I lost too much.

Hi Cody Willard- I just heard you on FOX say that gold is going to crash. Now I usually think you are one of the smarter guys on FOX but I think you are missing the big picture. When the US went off of gold and relegated silver to a low class industrial metal, the die was cast (for the record, I think taking silver away from the government was a very smart move on the part of central bankers who are probably hoarding silver at give away prices - silver should be trading around $62/oz at the historical 15:1 silver:gold ratio.) At that point, the dollar was cut loose and became fully dependent on the progressive inventiveness of Western Man, who could now do anything and be everything when cut free from his formerly restrictive moorings. Well, Progressive Western Man has failed to deliver, BIG TIME. Everyone, including you, is asking, where can I put my savings in case I lose my job or just want to retire??? When economic activity is completely stalled, due to government attempts to fix everything, it is going to become plainer than the nose on my face that gold is money. Silver is money. The day for theories and economic prizes is over. Now, all the world knows, even progressive inventive Western Man has to have an anchor. Peter Schiff is exactly right, IMO, when he says the bottom will be when the DOW = 1 oz gold. That will be the anchor, a re-setting of the economy from which all assets great and otherwise will be priced.

Cody, I usually love your commentary, but I have to respectfully disagree. Let me give you some bullet points: 1. There is more of an outcry for the abandoning of the dollar as the leading currency. Russia is now trading China in Rubles for oil. Russia is the biggest oil supplier in the world. China, who is our biggest debt holder, is raising concerns on the state of the US. China has formed a stronger partnership with Brazil verses the US on currency issues. China & Russia are also building up their gold reserves. They are even approaching the IMF for additional gold resources. 2. Gold has been in a consistent uptrend for the past 9 yrs. The US is also losing control of its currency. Since 1972, when the dollar was taken off the gold standard, our currency has greatly devalued. Add in the US budget deficit, bailouts, etc., Hyperinflation is inevitable. Take a look at the history of the German Mark. The same situation could happen to the US. 3. Northwestern Mutual Life Insurance Company makes the first gold purchase in 152 years. 4. Gold/Siver has been used for financial stability since the beginning of time. You can even refer to the Bible (Abraham - Genesis). I would hate to see you or anyone else lose their lifetime savings if the dollar has no value. I recommend that you hold on to some precious medals reserves. I know that you are getting several inquiries about your position. If you can, please address this subject on HH tonight to let your viewers know.

Cody, I am a bit surprised at you. You look only at one metric (M3) and then extrapolate amazing conclusions, not supported by either history or the overall data at large. I recommend that you consider taking a look at a recent and comprehensive analysis of inflation by Mark Lundeen at http://www.gold-eagle.com/editorials_08/lundeen061309.html on the web. His charting, historical overview, and analysis of current trends and government policy is far more comprehensive than what you presented here. Cody, I typically enjoy your commentary (though sometimes you get wild and incoherent), but I think you are getting overworked and loosing sight of the forest for a single tree. Based on a dollar to "reported" gold in storage ratio ALONE here in the USA, gold could easily be trading in the $3000-$4000 range NOW (and possibly higher) if it were not for "Plunge Protection Team" interventions in the precious metals markets. Check Mark's analysis and graphs, and look at the history. The "Greatest Depression" is soon to come...regrettably. May those who created this mess and the suffering that will soon occur, be held accountable here on earth. (Though, as a Christian, I I have no question that they certainly will be held accountable in the Final Judgement... unless they come clean beforehand). -Rich Vermillion

I am not an expert at any of this crap but did note that we did not get into this mess til gas went up to $4.00 per gallon--then people could not afford their housing--etc and it all went south from there--By the way--even in a down turn there will be crooks--just new faces---As for gold-you can't eat gold--As you noted--the only things going up in price are those we can not live without---so food is high on the list..Everything now has a price--it is just a question of how much..

Hmmm. I agree with you about what's going on with the banks, but would have to part ways from there. How can you make a claim that the dollar is going to be in short supply when fedzilla fires up the printing press at will and creates trillions of dollars of fiat "monopoly money"? It's NOT that there aren't/won't be enough paper dollars...it's simply those dollars do not have the buying power they used to. If anyone thought dollars had the capacity to even hold its' own, other governments wouldn't be suggesting a replacement for the reserve currency of the globe. It's been suggested with the IMF, Russia and China are both actively moving towards substitue currencies-heck, even little Timmy Geithner (the babboon) has said the Obama administration" is not opposed to replacing the dollar." Excuse me?? Too many people are foolishly treating current events with an air of "business as usual" advice. The emperor's new clothes. Most politicians aren't even telling the truth, because they know that if they did, their political career is over. The truth is this: For decades this country has (unknowingly/unwittingly) set into place the ingredients for a chain reaction that once started will be next to impossible to stop. This administration (and I'm talking both sides of the aisle here)whether through sheer incompetence or nefarious intention, has lit the fuse. Government is on a "power grab" and will force the insolvents out-maybe till all we have is Obama's Federal Reserve.

The scenario you present is very compelling. It also seems to explain the sudden interest in a new world currency. As long as the debt is tied to the dollar, unwinding the derivatives will be a slow process. I can't imagine how the rest of the world will tolerate this and go along quietly. It also predicts that the near future trading will not occur on fundamentals such as supply and demand. It will be based on who has the deepest pockets, the largest bet or the best public relations team. If we could, the best case for the investor is to pool resources and "make" their own currency and isolate from the dollar. If managed in a responsible manner, the currency would appreciate very rapidly to the dollar. Money would be made by the early investors in the new currency; and the financial world, based on the dollar, would become rational again.

This is not the first time our government had gone up to its eyeballs in debt. What has happen in the past is interest on borrow money go so high that it force the government to go on a diet and reduce it debt. That is what I think will happen in the current case.

Cody, I'm certainly no expert and unforeseeable events can change the way things play out but I think you are taking a big chance with your credibility making a call like that. I'm with you on the commodities but gold is going to be right there with them. To me it seems obvious that the dollar is being devalued at an alarming rate and gold is going to be a relatively safe place to store wealth. It sounds like you are over thinking and trying to come off like a genius by playing a long shot or listening to someone who has nothing to lose by "you" espousing their convoluted theory. I've always enjoyed your commentary but this line of thinking just doesn't stand up to common sense.

what one investment has returned over 15 % the last eight years? what one investment was positive last year? what one investment is UP 30 % just this year? it's not bonds oil Dow S&P Nasdaq Russell 2000 Dollar

Why is gold ever valuable? I like Warren Buffets take on gold.

Cody, I am as angry as you are, but I am not opposed to making money on the bastards. Try the FOM FOO investment strategy. What is that you ask? Follow Our Money to the Friends Of Obama

While your concept of gold losing half its value is possible, you are under-estimating the currency and other aspects of the asset. The reason gold has continued to be in favor the last few years is not because of its inflation hedge characteristics but rather because of its store of value, currency and real asset characteristics combined. Right now gold is responding to a combination of factors, primarily that of a currency vs. the US Dollar. With our worsening US government balance sheet wrecking the US Dollar, gold will continue to be an attractive "currency" and will continue to be in demand by foreign and domestic investors alike. As our balance sheet deteriorates, our equity and fixed income assets become more risky. I am not a gold "bug" but rather someone that simply appreciates the dilemma we are in until we decide to either change our consumption habits or China to revalue their currency via tariffs. Until then, keep your gold.

Ask yourself what will be the easiest way for the government to get out of this mess. Inflation or better know as the hidden tax "that's my opinion". There is no need to raise people's tax percentage bracket too much when all you have to do is inflate your way out. It's much easier to pay back your debt with worthless cash. The government will try to slowly accomplish this task over a period of years, so as not to alarm the general public. Commodities like gold, oil or black gold, silver, food, ect.. I am very worried about gold's price right now "might be a bubble forming see the markets during the 80's". I've been burned by the last few market bubbles and because of this fact; when all the sheep head in a certain direction I now go in the opposite direction. Good luck investing out there people! Bah Bah Bah

Cody: Your article made a good point but when you look internationally, I still think the dollar can fall relative to other currencies as foreign investors lose confidence in the dollar and if nobody wants what you have it take a lot of them to get what they have. (He who has the gold rules!) As far as investments to gain from rising interest rates I use the following: TYO Direxion Daily 10-Year Treasury Bear 3X Shares TMF Direxion Daily 30-Year Treasury Bear 3X Shares TBT ProShares UltraShort 20+ Year Trea (ETF) My analysis of 10 year treasury yields after the last deflationary period (Looking at 1964-1984 the yield rose and average of .7%/year for the 20 year period culminating in the Reagan/Volker years). My estimates based on this same level of growth shows these funds should grow about 250%/year (Assuming we are starting the trend this year). Imagine 250% growth per year for 20 years! I would be interested in knowing after you look into it if you come to the same conclusion. The TBT ETF is not as leveraged as the Direxion ETF's but has been around longer and has more action on the options. I own the XRJAM Jan 2011@65 calls. You can see the historical chart here: http://seekingalpha.com/article/38536-10-year-treasury-note-yields-may-not-be-a-threat-yet

One thing to remember when trying to compare the current economic environment to historic examples is that most of this debate is about finance. We need to be looking at physics rather than financial manipulation. The problem is not just about the corrupt financial manipuation that took place trying to keep the bubble expanding. The problem is that we have become a nation of people trying to all become high rollers, trading cell phones, video games, big screen TVs and other "commodities" we don't really need and have allowed the basics like agriculture, mining and basic manufacturing capability to dwindle to almost nothing. Too many of us are living off the public dole in one way or another or are trying to get ahead by becoming a deal maker rather than earning a living producing things people really need.

It is a game in which one wrong move (or maybe a premeditated move) by the fed can set off a chain reaction in either direction (inflation/deflation). The debt is created (with plans to create plenty more), and a portion is already monetized. The game is to try to manage the economy and the debt such that up interest rates do not kill an economy that is already quite fragile, pull excess liquidity out of the banking system without damaging the banks, and remove most of the treasury bills and bonds before they become monetized. Good luck on figuring out how all this is going to play out - a deflationary depression or a hyper-inflation. BOTH destroy wealth. If you are lucky enough to hold dollars at the end, you can buy assets cheap. It could happen as you predict. Personally, I do not give deflationary depression any greater probability than hyper-inflation at this time. The only bet that is close to a sure thing is that whatever happens, it will not be pleasant if you are on the wrong side of the dollar (if you play it that way). At least with gold, your purchasing power remains constant (if it is not confiscated and the gold market is free).

As the U.S. guarantee becomes worth less until it's virtually worthless (little joke there), the dollar will continue to decline, which should increase the value of gold. Cody, I wouldn't switch positions so quickly. While interest rate increases should favor the dollar, the "worthlessness" of the govt guarantee will override. Buy currencies, particularly Aussie and New Zealand.

The Mad Max mentality is one reason gold is going up. I'm a little disapointed too that I won't be living off my acrerage down here in GA and I'll still have to deal with conformity. Short of a barter style counter economy there shouldn't be a true need for the physical holding of any precious metal. GLD, SLV, OIL, GROW, are all safer bets in my humblest of opinions. Those who ran to gold in the 70's just saw thier investment pay off last summer. I know the dynamics have changed & other economies are running high debt:GDP with more to follow but it's just too tricky to sell gold coin when the time would come. If you think gold coin is "where its at" then you should also buy stock in ebay since that's where you'll be cashing those coins in for dollars later. I do think inflation will be a pain in the rear but the cashier at McDonalds will probably mistake my $954 Liberty Dollar for a $1 Sacajawea making gold that much less atractive.

The current administration will accept runaway inflation over high interest rates. Inflate incomes, inflate taxes, and pay back (at least some of) the debt with weak, inflated dollars. High interest rates will come, but high inflation will occur before high interest rates. Where to put your money? What did best in the late seventies (high inflation) and then in the early eighties (high rates). Commodities, foreign currencies (some) and emerging markets now; bonds later.

cody, try two etf's, either pst or tbt. you could also use dzz regarding your gold theme. rc/////////

1. The US dollar's purchasing power has been eroding in the last 20 years and this will only accelerate with the recent bail-outs and stimulus packages. 2. The country's manufacturing base has been dwindling over the years and trade imbalance increasing. 3.Countries like China, India, Brazil, Russia and OPEC-nations have been talking finding another reserve currency. With all the above and more not mentioned, all bets are against the US dollar. Gold prices will only go up when hyperinflation takes hold.

Given what's going on in Washington D.C. with respect to out of control spending and considering the political philosophy of the folks running the government bet on inflation before high interest rates. I think the plan is to pay back the debt (or at least some of it) weak, inflated dollars. At some point interest rates will go up, way up, but before that happens watch inflation reach Carter like levels.