| | Peter,
Those people who got in "late" by Harry Browne standards would have paid between what, $300 to $600 per ounce? "Late" is a relative term. They would have doubled their money at this point despite getting in "late."
The argument is about whether or not current gold prices represent a bubble, or a natural high in some investment cycle, or a relationship to the number of dollars printed and/or the perceived stability of the dollar.
There are good arguments being made that gold will double in value in a few years because of the number of dollars that have been printed, but that haven't yet come out of the Central Banks reserve accounts because of the reluctance of anyone to borrow or lend at this time (primarily because of high demand for dollars - an economic/politically induced psychological factor.)
Harry Browne pointed out that no one can accurately predict whether or not an economy will drop into a massive credit crunch (deflation) as opposed to a hyperinflation at that point in time where either one is a possibility. I think that was one of the most significant things he said. If means that the price of gold could soar, or could drop like a rock at the 'tipping point.'
All the rest of the time we just see the ebb and flow of investment dollars looking for gains or safety (and the long term upward trend of gold is just reflecting the decrease in the value of the dollar). Under these more or less normal conditions Gold might stay the same or go down a ways - for now. That is, the price of gold may be high by the standards of these normal times - but there will come a time, unless the economy gets fixed by sound fiscal and monetary policies being enacted, when that tipping point is reached. At that point, and given the way things are right now, that could be as early as next week, and very likely within a few years, it will hit as an extreme movement. It will be panic driven, but reflective a real social change as well, and those who hold 1/2 gold and 1/2 long term treasury bonds will loose most of one of those investments but gain more than they lost in the other. The problem is that both are likely to bring extreme social unrest at the same time and safeguarding ones wealth will be only one of the pressing concerns.
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I've been way wrong in the past - many times. And I hope that I'm wrong now. I'd kind of like to live out my life without that kind of excitement. Here's how I might be wrong. 1.) The economy has much more depth and strength than it appears and what we now see as weakness is only the sluggishness of adjusting to changes and the caution of people who waiting to make sure things don't crash before getting active again. 2.) The human capacity to correct course just before going over a cliff will show up. People will make changes in our political structure and the things will get better. 3.) All of those excess dollars will be absorbed back into the treasury and our inflation won't be worse than under Carter and with an economy burning away in a post-recession fashion, it can absorb the higher interest rates needed to pull the dollars in. 4.) The massive debt will then be systematically retired out of the revenues obtained from a healthy economy with reduced government spending.
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