Interesting debate.  I think ive seen it before, but thought I would share
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Dent - uses demographics to project economic trends, predicts deflation, lower gold prices until a bottom of some sort around 2020
Schiff - has been predicting more QE and much higher gold prices

Seems that both were calling out the warning signs prior to the 2008-09 financial mess.  However, its where we go from here that they differ on.
My take is that I suspect the fed isnt done yet and wont simply allow another massive stock market collapse without jumping back on the QE game.

Put me in the lower gold prices camp.

Deflation is the logical path after false wealth creation collapses (bubble bursting) but the federal reserve has consistently did all it can to avoid deflation via ZIRP and QE. I don't expect the fed to change it's direction, it will most likely follow the Japan model and double down on trying to 'create growth' by expanding it's money creation.

Keep an eye on Russia.  If economic sanctions are put on them, we will see a shift in
how they trade.  They are already in bed with Iran and will trade in Gold and Oil or even Rubles.
Once the world sees that it can purchase in other currencies, other than the dollar, it is down hill from there.

At this point, I am not sure it matters which one of them is correct.

Hyper-inflation vs. Depression

If the ballon is going to pop,

is it better to pop it with a pin?
or inflate it with air till it pops?

That would mean a strong dollar.....and high employment growing economy.

I don't forsee that until our great grandchildren finish the civil war 2.

My thoughts as well. I'll just add China to the mix.  To me this is even bigger.  If in fact China and Russia are working together to create their own version of SWIFT, completely bypassing the dollar.
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I dont see how the chickenhawks in washington could sit idly by and not spark a big war in an effort to stop it.   Although one reason for them to stop just short of WWIII, would be that they see more benefit from selling us out and throwing in with the Chicoms kinda like Harry Reid and others have done.

Why would China  and Russia be buying up huge loads of physical gold, if they thought it would get cut by half or two thirds yet again?  Even if it does go below 1000, physical demand will surge even stronger.

I think Russia and China are getting rid of their excess dollars (buying gold) because they don't want to be holdig those green slips of paper when the end comes.

China has lost a lot of interest in exchanging our dollars for our bonds,

I suppose China could be buying our manufactured goods instead of gold with our dollars,
No wait........

Besides gold, what else can they spend our dollars on?

Perhaps they will just buy us,
http://www.forbes.com/sites/kenrapoza/2013/07/10/chinese-to-spend-billions-on-american-real-estate/

Maybe one day, much like Russia and Ukraine now, they will feel the need to send troops here to protect the Chinese peoples interests.

They have been busy buying mining operations in South Africa and control of other natural resources in central and south America.

Cost of production is $1200 per oz.

With respect, this is silly.  24 years ago the Japanese bought Pebble Beach, and all we heard was how this monstrous competitive Asian tiger was going to own us.

These days it's all about China this, China that.  History repeats itself.


China is fucked.

Their provincial debt is staggering.  It will lead to bailouts from their central government, which, to its credit, actually has a positive balance sheet.  Their urban areas have real estate bubble that makes the one we just slogged through look small.

They're staring down the barrel of a demographic disaster, the obvious and inevitable consequence of their one-child policy, which is poised to wreck the one thing they're good at: mass producing simple cheap stuff with cheap labor.

They've got a billion people living in mud huts, in truly 3rd world conditions.

They've got massive pollution.  God only knows how many Superfund sites ... but wait, no Superfund.

They have zero - ZERO - ability to project any kind of military power outside their immediate area.

And oh yeah, they're ruled by an oppressive communist regime.  We've seen how that goes.

China is fucked, and I just don't get why so many people are so afraid of them.


We as Americans have real problems.  We ought to stop pretending that this Chinese boogeyman is one of them.

Yea, I probably should have included a sarcasm or other smiley.
However, I do think countries around the world are looking for ways to unload their excess supply of dollars.

Kind of like "musical chairs" and when the music ends......

No, it wouldn't.  Gold's price varied long before the dollar came on the scene, and will vary long after the dollar fades away.

Nor does it require a high employment economy, though it probably does require a modestly growing economy.

You have to look at what drives the price of gold.  

short of artificially fixing the price of gold by making it currency, gold is like any other commodity. it will go up and down as the market sees fit.

there is a bit of a floor on gold due to the cost of production, but oddly the cost of production that was stated to be < $300 a few years back when gold was closer to $300, is now stated to be $1200. Do you really think the cost of production went up 4X in a few years?

there are a lot of scam artists out there on all sides of the political spectrum.

no one really knows there this is headed.

The cost of production is directly proportional to grams per ton.  The cost of open pit mining is going to be the same but
if one mine is pulling 1 gram per ton vs 2 grams per ton from the other, obviously the second mine is going to have a different profit margin.
I'm not buying that argument.

As to whether we're going to have big deflation or big inflation, I think that the current economic situation is proving that there can be both simultaneously. Stagflation of the type seen in the 70s involved simultaneous high inflation in basic necessities with low or negative growth in wages, earnings, and overall demand. So, yes it is possible that they are both right since such a scenario has in fact happened in the past. Are we headed for another debilitating 70s style biflation? That's a tougher one to call as I think if the same scale of problem were to happen today, it would cause an outright depression, rather than a "severe recession" as occurred back then. There is NO headroom left in the economy as a whole, and people are already at their tolerance limit.

If we have another round of high inflation with declining wage/earning/jobs, this will accelerate the decimation of the middle class into being "working poor". The "rich" may have some of their wealth evaporate, but they will still not be poor. The poor will be poor regardless of inflation or deflation. Only the middle class will suffer substantially, just as it was in the 70s.

Of course this is the end game...all communist countries are two class systems.

I don't think that we have a lot to fear from China personally but I DO think that countries around China DO need to fear China.  I don't remember the figures off hand but by something like 2020, China will have something like 20,000,000 (yes that's 20 million) men who are unable to find a wife due to China's one child policy and the desire of Chinese families to have a male child.  The Chinese have aborted the majority of their female children.  

What will happen with 20 million men who are unable to marry a woman?  Of course, homosexuality will likely rise and I have a friend who is Chinese and goes to China yearly and he told me that houses of prostitution are HUGE business there.  But, there are still many men who would probably like to meet a girl and marry her....but can't.  There just aren't enough women.  So....what happens then?  We know that wars have been fought in the history of the world over women and it was common many years ago to take women from countries that your country conquered.  But, to the best of my historical knowledge, the world has never seen such a massive skewed male/female ratio.  

It'll be interesting.  If I lived in a country around China....I'd be very concerned.

Gold and silver are being artificially held back/down.

You are correct in looking at what drives the price of  gold, but it is being heavily manipulated. when the dollar crashes Gold will spike temporarily then fall to a more realistic sustainable level.