Ron Paul: I'm Not Selling My Gold

Ron Paul pulled no punches on CNBC yesterday. “I’ve watched this since 1971… believe me, the printing is going to continue, the value of the dollar is going to go down and gold will go up.”

The well known libertarian, gold enthusiast and Daily Reckoningcontributor Ron Paul was interviewed yesterday to give his thoughts on recent gold price swings and gold’s relationship to the dollar.

Dr. Paul, who is famous for his dire political and economic predictions, foresees “more Detroits” in the U.S. He suggested that “eventually, the government of the United States will be somewhat similar to Detroit, because people will give up confidence… in the dollar… and then you are going to see some real, real changes in this system, which has been built on a fiat dollar for the last 40 years.”

Reports indicate that 64% of Dr. Paul’s personal finances are in gold bullion and gold-related mining stocks, according to Business Insider. To contrast, even dedicated gold enthusiasts such as Marc Faber usually advocate a much lower gold allocation. Faber’s is reportedly around 25%.

Futures traders seem to have a newfound love for gold, even if they are still bearish long term. The Wall Street Journal blog noted that gold prices are rallying at a seasonally appropriate time, which could send the spot price up over 10%.

Of course, the charts are up right now. Soon they will fall again, perhaps as far down as $1,000, and the traders will proclaim the end of gold again. This is why it’s crucial for investors to keep an eye on the larger picture and the role of both monetary policy and fiscal problems that have not been solved and heavily impact gold prices. The larger the historical time frame you use for reference, the more it becomes clear that fiat currency is destined to be abused and abandoned.

Our own Byron King notes that physical gold is still scarce, and for bigger banks, the cost of leasing it just jumped 150%. This could lead to a spike in gold prices, he predicted yesterday. “It’ll be a good time to own physical gold, which I hope you’ve been buying.”

Jason Farrell

For The Daily Reckoning

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