James:
I was having a conversation with my survival think tank buddy tonight and he asked me when I thought the dollar would collapse. I answered that it was like asking when the next ice age would come. It’s due in another 1,000 years but we could be off by century or a millennia. It’s the same thing with the dollar. It is impossible, mathematically speaking, for it to continue in it’s current valuation indefinitely as it is in a non-sustainable negative spiral for reasons people reading this blog are well versed.
A collapse could happen tomorrow but is could also be delayed for years. This is because the timing of the collapse is not something that can be calculated by mathematical formula alone. It also has a great deal to do with psychological and political forces. As an example, Mr. Obama could authorize the sale of missile technology to China in exchange for buying our debt or not dumping the dollar. The media could continue the party line about a jobless recovery (a euphemism still makes me chortle) and people could continue to remain in dollar denominated assets. Banks could continue the counterintuitive action of not moving forward on foreclosures so as to avoid having to put the losses on their books or do upkeep on the property.
The same holds true for gold. As long as the majority of the gold players are willing to take profits in dollars rather than demanding physical delivery of gold contracts the price of gold can be manipulated.
Then there is food. While food commodities can be manipulated, unlike gold, food is continually consumed and we are running out. You can hide the weak dollar by continuing to ‘double down’ at the world casino until your credit line runs dry. You can hollow out gold bars and fill them with tungsten as long as no one cuts them open. You can even sell the same serial numbered gold bar to 10 people giving them identical warehouse certificates and as long as none of them take delivery, you’ve just ‘multiplied’ your gold holdings by tenfold.
This cannot be done with food that is eaten. You either have it or you don’t. So, my long winded answer is that you’ll know that the gig is up when the food runs out. – SF in Hawaii