With this book, Nick Barisheff joins the ranks of other “gold bugs” with a shocking prediction for gold to reach $10,000.  This comes at a time where the mainstream media and analysts have called the end of gold’s bull run.  We’ve seen gold fall from its September 2011 high of $1,921 to its April 2013 low of $1,350.  Barisheff certainly doesn’t agree with these calls and with his book “$10,000 Gold”, he presents a strong investment case for owning physical precious metals. 

While Barisheff doesn’t give a date for his $10,000 target, he provides a great primer on why it is likely.  He sets the stage with a background on central banks, their motives and how they create money out of thin air and at virtually zero cost.  As no currency in the world is backed by gold, central banks no longer are restrained from printing more money to fund ever increasing government spending. 

Barisheff further highlights that the US population is aging. The Labour force participation rate is at a 30 year low. They’ve lost their manufacturing base. They are managing an exponentially growing, unsustainable, unprecedented and unfathomable $120 trillion debt.  The US dollar is poised to lose its status as the world’s reserve currency and this has serious implications for the world’s largest economy.  More money printing is inevitable as the US attempts to revive their ailing economy.  The US’ money printing has sparked a global currency war with other countries choosing to devalue their currencies in response.  This devaluation is inflation.  The higher the inflation rate is, the greater the loss of money’s purchasing power. 

This is where gold comes to the rescue.  Barisheff shows that throughout history gold has had the ability to preserve purchasing power.  The second part of this book explores the different ways to own gold as a means of preserving purchasing power and protecting ones savings from runaway inflation.  One can use physical coins stored in a safety deposit box, exchanged traded funds, closed end funds, mutual funds, futures contracts, and shares of mining companies.  Barisheff reviews each of these methods with the following three questions:

• What is the true state of the investment’s liquidity in the event of a crisis?
• What is the potential for third-party liability?
• What is the potential for human mismanagement?

In the addendum, Barisheff acknowledges that owning gold equities (mining stocks) certainly makes sense in this environment as they are at historic levels of undervaluation.  However, you will not find advice on how to pick the next big mining stock. The focus of this book is on the case for owning physical gold.  Barisheff correctly distinguishes between the purpose for owning physical gold which is wealth preservation and owning gold equities which is for wealth accumulation.  For advice on how to invest in gold equities you will have to look elsewhere. 

Overall this book presents a compelling case for owning physical gold as a means of protecting ones wealth from inflation and from further western economic decline.

Dan Simon dan.simon@europac.ca