NEW YORK (SilverGoldBull.com) -- It seems at the very least ironic that as I begin a new chapter in my own career as precious metals analyst for Silver Gold Bull, that simultaneously I'm writing my last chapter on one facet of that analysis. This will be my last effort at playing the increasingly irrelevant game of attempting to forecast gold and silver prices -- in terms of the bankers' paper.Many readers will be aghast at this announcement. How can I "analyze" the gold and silver market without providing guidance on its (paper) prices? I would immediately reverse this proposition with a question of my own. How can anyone provide rational estimates for future prices of hard assets priced in paper that is already effectively worthless?
With most of our fiat currencies now being conjured into existence electronically, this is the ultimate example of an infinite quantity/zero cost item . . . with one exception. Since all of this funny money is borrowed into existence, the bankers were previously able to claim that in fact this was not a "zero cost" item -- because of the debt/interest attached to each currency unit. However that argument, the only basis for claiming that the bankers' fiat currency had any value whatsoever evaporated the day that the U.S. began its permanent era of 0% interest rates. On that day the U.S. dollar fully became a zero cost/infinite quantity item -- and indisputably worthless as a basic proposition of logic. Why do people think B.S. Bernanke attempted to peddle the myth of an "exit strategy" -- i.e., an end to 0% interest rates -- for nearly three years, before finally being forced to abandon that absurd pretense? Because he and the rest of the banking cabal are terrified that someone would stand up (as I have done on several occasions) and announce that "the Emperor is wearing no clothes."
In that world, everything was "priced" in gold and silver. The only way that mere paper could ever acquire value was as a certificate directly backed by gold or silver. The concept of a world where everything was "priced" in fiat paper which was backed by nothing (and effectively worthless) would have been a proposition much too ludicrous for any of our ancestors to consider -- except during their own, brief, disastrous experiments with such paper. As our fiat currencies begin their final descent into history's dust-bin of failed paper, we are entering a period of transition and re-education. We must reintroduce into our minds the concept of once again pricing goods and services in terms of items of enduring value (i.e. real money).
If we exchange our dollars (or euros) for hard assets (i.e., silver and gold) now, before they inevitably suffer the same fate as the Zimbabwe dollar, we can still protect what is left of our wealth. If we attempt to exchange our paper the day after our own "Tulipmania" comes to an end we will find we are holding nothing but an inferior brand of toilet paper. The speed of this final collapse is so unpredictable that it has become a Fool's Game attempting to guess short-term prices for silver and gold -- and now even predicting longer-term prices as well. Indeed, this is now so speculative that it only makes sense to do so in a "best-case scenario" for the bankers' paper (i.e., where they are able to delay the collapse of their paper with the maximum amount of success). Obviously in their worst-case scenario the paper would be absolutely worthless, inferring infinite prices for gold, silver and other hard assets. Thus, my worst-case scenario for the price of gold is a price of at least $5,000 an ounce within the next two to five years. Similarly, my prediction for the price of silver would be a minimum of $200 an ounce within that same time horizon. Some will accuse me of making a "prediction" so loose as to be useless. I make no apologies. None other than the eminent John Williams of Shadowstats.com, the foremost expert on U.S. inflation, flatly asserted that hyperinflation could hit the U.S. as early as 2011. The fact that this estimate has proven premature is no slight against Williams. In periods of market "mania," whether we are talking about Tulipmania 400 years ago or "dot-com mania" little more than a decade ago, such collective insanity tends to endure longer than any rational mind would predict. So it is with "dollar mania." I have just finished demonstrating that the U.S. dollar is already worthless, as a tautology of logic. At the same time, we have the shills of the corporate media assuring any and all sheep who still heed their nonsense that the U.S. dollar is a "safe haven." The endless assertions by these loyal drones of the "unsinkable" stature, of the dollar is eerily reminiscent of the Titanic. Understand that the Flight out of Paper has already begun. In the East -- the prosperous economies which are slowly, steadily taking control of the global economy -- trade which used to be conducted in U.S. dollars, trillions of dollars worth, is now being carried out through direct, bilateral trading using these nations' own currencies. This huge collapse in demand for U.S. dollars is yet another dynamic that can only end in a zero-value dollar. As the global glut of dollars gets larger and larger, the value of these ever-growing mountains of paper must rapidly decline in corresponding terms. Arguing that the U.S. dollar "has value" simply because it has not yet hit zero is precisely the same circular reasoning which doomed many of the Dutch at the end of Tulipmania. Today I'm making my last call with respect to gold and silver prices. Another way of putting this would be that I'm making my "last call" for any/all passengers willing to disembark from the U.S.S. Titanic. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.