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Page added on September 30, 2009

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Byron King: Peak Gold + Weak Dollar = $2,000+

A highly regarded resource sector expert who discusses his field fervently whenever possible and whose writings include the top-ranking Outstanding Investments, Byron King brings his views direct to The Gold Report audience in this exclusive interview. Unconvinced that the recession is behind us, he is equally sure that the “bottomless pit” mentality of stimulus spending will wreck the dollar. Those are among the reasons he sees $2,000-per-ounce gold on the not-too-distant horizon.

TGR So if we’re looking at this multi-year, dispersed approach to accumulating gold while keeping a lid of gold prices, why would gold go to $2,000?

BK: Because we’re in a world that appears to have encountered peak gold as well as peak oil. If you look at historical production, worldwide gold output reached a top right around the year 2000–2001. Overall output has declined and we’re not replacing output from the big mines of the past. Despite discoveries here and there, miners have to dig deeper and deeper into the reserves. In a big mining country such as South Africa, for example, some of the deepest mines now are at 4,000 meters. That’s 13,000 feet.

TGR: So your view is that scarcity rather than a weakening U.S. dollar will drive the increase in the gold price?

BK: Well, it’s really both. More and more dollars are chasing less and less gold. You’re piling the monetary inflation coming out of Washington, D.C. on top of the dwindling production coming out of the mines of the whole world. Beyond that, a lot of what kept gold prices down and the dollar strong for years was the impression that the United States had its act together and would pull through over the long term, despite all of its various flaws and faults. In the eyes of the world, we’ve somehow managed to blow off a lot of that impression and I don’t know what it will take to recover it. It took winning World War II the last time.

GoldSeek



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