1. Please tell us how long have you been involved in gold and silver industry? Why silver and gold?
You could say gold and silver run in my blood. My family owns several placer gold claims in California, Nevada, and Arizona. My dad has worked these for a couple decades now – no big finds, but enough to keep paying for his hobby. I always enjoy getting outdoors, but gold panning can be like fishing – long periods of boredom (along with perhaps some beer drinking), with only a small chance of getting that big catch. So I've focused on the investment side, which has been a perfect match for Casey Research. Given how our global leaders have decided to solve their fiscal irresponsibility – adding to debt and printing money – I continue to buy gold and silver today.
2. When $2,000 gold? 2013, 2014? Who win and who lose?
I view making a price prediction, especially within a certain time frame, as entertainment. No one really knows when the price will hit a certain target, and even those that have good track records at making predictions are frequently wrong. The bottom line is that gold and silver prices are going higher. While I can't guarantee that, of course, I think we're in a period of time where gold is not only a low risk bet, but a must-own asset because of the dilution of all major currencies.
A $2,000 gold price will come. Unfortunately, $2,000 won't be the top and the price will likely go much higher. I say "unfortunately" because the higher the gold price, the worse things are. Given how reckless most politicians have been with their overspending and overprinting, I think it is not only possible but probable that gold reaches the mid four-figure range. The "losers" will be those that are holding only government-issued fiat currency and no precious metals.
3. Manipulation thesis – is the long side action in gold artificially created or it is just a regular market base-building?
Manipulation is a big topic in the gold industry, and a controversial one. I don't trust government officials at all, but I'm skeptical of the argument that there is collusion among public and private entities to manipulate the gold price. The more important issue in my mind is, how much gold and silver do I need to offset the rise in inflation that is coming? Since gold is the only asset that is not simultaneously someone else's liability, I want to make sure I own enough ounces to protect my standard of living from this mess the politicians have created. Even if they are fully controlling the price, they won't be able to do so forever.
4. When do you think China will release new official holdings stats?
They last reported in 2009, and it was 2004 when they reported before that. If they were to follow the same pattern, we wouldn't hear anything official from them until 2014. But they don't follow a schedule; they just report when they want.
Their official holdings in 2009 totaled 1,054 tonnes; based on the amount of imports through Hong Kong and the fact that very little production leaves the country, they likely have been aggressively adding to their Reserve position. I'm sure they are buying when the gold price drops, like now, and I think we should follow their lead. Once an announcement is made, if the amount is higher than what many in the mainstream think it will be, the gold price will catapult higher. I expect this to happen.
5. What is the most probable “IT” event for gold?
Inflation. You cannot debase currencies as much as many countries have and expect to not eventually see price inflation. I can't tell you when this will happen, but I do not see any way around it. The realities about coming inflation are first, history shows high levels of debt and deficit spending eventually lead to high inflation; there are virtually no exceptions. Second, history shows inflation can occur suddenly and grow rapidly; there are plenty of examples of where inflation was low, like now, and rose two, three and four-fold within just two years. And third, most developed world governments NEED inflation. There is no viable solution to paying down our debt – the only option is to reduce the real cost of servicing that debt by printing money. Once you internalize this, an understanding of the most likely consequences becomes clear. Those consequences mean higher prices for everything, including gold. This is probably the biggest catalyst for the gold price doubling and tripling in the future.
6. Putin and gold – is he buying out of spite? Is that a considered policy decision or financial guerrilla action?
I'm not an expert on Putin, but anyone who is buying gold now, in my view, is being prudent. Putin is no dummy – it's not hard to see what's coming. He surely knows what it means to run printing presses around the clock, even if the dilution doesn’t immediately show up. He has tremendous exposure to dollar-denominated assets; the US Treasuries he's holding – and every other US asset – will lose significant value going forward. If I were in his shoes, I'd be doing the same thing.
7. Do you believe we are heading for a mega-crash? If yes what is your most favorite mega-crash scenario?
Precious metals are having a mini-crash right now. I don't know how low they go – some technical analysts say $1,550/ounce – but the lower they go the more ounces I'll be able to buy. If the stock markets crash, gold could fall further since some large institutional funds may need to sell it to for liquidity purposes or to cover other losses, but that will just be a buying opportunity to us.
8. Many Russians keep stacks of US dollars in their safety deposit boxes as a last resort – what would you say to them?
Keeping some currency on hand for an emergency is smart. However, at some point in the not too distant future, US dollars (and many other currencies) will lose a significant amount of their purchasing power. It will not be prudent to hold onto dollars once that process begins. I personally devote most of my savings to gold and silver, because governments cannot dilute it, which is exactly what they're doing to the currency I use to buy groceries every week. No matter what happens in the future, an ounce of gold will buy me the same amount of goods and services ten years from now as it does today. If you withdraw a stack of dollars from your safe deposit box in a few years and spend them, you will find that they do not buy as many groceries or gas as they do today. So my advice is that Russians should stack some gold and silver coins in the safe deposit box beside those US dollars.