My apologies if anyone in this thread or in the Fed thread have already pointed this out, but after watching a few podcasts/interviews over the last few days of prominent precious metals investors, they all gave the following reason why they think right now is a good time to invest in gold and/or silver:
1. The Fed is in an impossible position. Because the US, Canada, and other countries have such humongous debts/budget deficits, the Fed cannot raise interest rates high enough to adequately halt inflation and/or preserve the value of paper currency, because raising the interest rates too high would cause governments to start defaulting on their debts.
2. So, over the next year or so, the Fed will incrementally raise rates, perhaps at a quarter percent at a time, and won't be able to go any further than maybe 3 or 3.5%, which is not enough to fix things.
3. The stock market will be lackluster or fairly steady during the initial rate hikes until investors realize that the interest increases aren't working. Then, there will be a broad sell-off over several weeks as investors flee the market, and the market will nosedive. The crash will initially include mining stocks, although they likely won't decline as much as other stocks, especially speculative stocks in other industries.
4. Looking for alternative investments to put their cash, investors will first start rushing to gold, and then there will be spill-over to silver and other metals. Gold will break $2000 oz and silver $30. Mining stock values will greatly increase.
I believe it was Michael Gentile who said something like, "If gold reaches $2000 an ounce within the next 18 months, in some sense I'll be happy because I'll make a lot of money off of it. However, I'll also be distressed because it means that the economy is in a severe crisis that signals perhaps years of dark times for a lot of people."
