So much for those $14's.
I am looking at $13.94 on silver with gold just a shade above $1050.
This is more about King Dollar than the precious metals.
King Dollar will thrive in the near term as the best safe haven among paper currencies. As long as there is faith in any paper dollar, the US Dollar will be King Dollar. It really was a great system they set up for Americans coming out of Bretton Woods. I don't like being the generation that gets to unwind that as it had to end eventually, but it probably was the best way forward at that time.
Going forward I expect more deflation as demand destruction takes hold in the centrally planned global economy. Throw in the flight to safety that fuels King Dollar and a potential increase in interest rates and things look ugly for gold and silver, from the point of view of an American anyway. In other countries where their currency is depreciating relative to King Dollar, gold and silver will likely be looking pretty good. If you believe that the strength in King Dollar is fleeting, or just want to hedge against tail risk in the event of the death of King Dollar, gold and silver make a lot of sense.
After the deflation is wide spread, then we get to paper over the problems and that should cause inflation or perhaps hyperinflation / death of King Dollar. The Bernanke helicopter money drop if you will. That probably isn't enough to cause hyperinflation in my book. Even Yellen giving every American citizen $50,000 wouldn't cause hyperinflation. For that you will need a loss in the faith of the US Government to pay its obligations going forward. Considering that we print the dollars out of thin air, that means that people won't accept them anymore. This is more of a geopolitical risk. China or Russia doing something crazy. Maybe the death of the petrodollar with Saudi Arabia getting exposed by Russia in this whole mid east mess, who knows.
Do I think we will see the end of the dollar soon? No. It is possible and more possible than at any point since the short time after August 15, 1971 when Nixon closed the gold window temporarily forever.
I really think we will see some type of default on our debts to someone. Maybe we can stuff everyone's MyRA retirement account with items in the Social Security trust fund / lock box. Who knows. To me though, the dollar being devalued against something (gold, oil, productive nation's currencies, SDR's, bitcoin, etc) is what is going to happen. An economic collapse isn't a collapse of society or even the government, just dead beats beating debts.
