CNBC's Matt Nesto recently reported the latest acronym to hit Wall Street is DOG: dollar, oil, gold - these are the main subjects in Charles Goyette's new book The Dollar Meltdown along with his strong stance on the end of the American Empire. Like Robert Prechter who I wrote about a few weeks ago, Goyette is a disciple of Ludwig von Mises and the Austrian School of economics, but with a gaping philosophical difference. Prechter believes we are headed for a depression and will be in a deflationary period while Goyette presumes we are heading for hyperinflation and the end of the world as we know it with the collapse of the worldwide system of fiat currency. Not only does Goyette assume a return to the gold standard once the current financial system implodes, but also seeks to abolish the Federal Reserve and world's Central Banks.
This annihilation of the World Order is coming sooner than later according to Goyette and he strongly encourages investors to liquidate their holdings in dollars and stocks and bonds and invest in gold bullion, silver coins, oil ETFs and commodity ETFs. He talks specifically about Ludwig von Mises' dictum of "the crack-up boom" when people realize their paper money isn't worth anything and the price of gold can triple or quadruple within days or weeks. Even at today's spot price of gold at roughly $1,200 an ounce, Goyette believes it is still undervalued when you take history into consideration and it would have to climb to $2,500 an ounce in inflation adjusted terms to reach the price it obtained a generation ago. His solution is to purchase a core position in physical gold bullion coins, preferably the U.S. Gold Eagle, the Canadian Maple Leaf or South African Krugerrand.
I agree with Goyette that as Americans, we have accumulated too much debt on both personal and governmental levels and maybe you should keep some gold coins in your safe to bribe the guards at the border, but that's about as far as it goes. Most of the ideas in the book could have been written by the Al-Qaeada public relations department because quite frankly, he doesn't discuss the societal ramifications of what would happen if indeed we went into hyperinflation and the world economy collapsed. If what Goyette says is true and does pan out, there will be no winners and believe me, you won't be able to keep your gold. There will be martial law and if the government doesn't confiscate your bullion, then some band of marauders will take it from you by force.
Besides the accumulation of gold (silver coins, too), The Dollar Meltdown suggests appropriating a large portion of you finances in commodity ETFs, specifically oil and agriculture. The problem with this thesis is that if there is a collapse of the financial system, most brokerage houses and banks will probably go bust too, making your investments worthless. If you believe in the apocalyptic future, it's better to stock up with gold bullion and a cache of arms. We live in the era of the Jetsons, not the Flintstones, and to suggest going back to a finacial system that was utilized over one hundred years ago is not the answer to our problems.