Kitco News--Gold will continue its rise since the US dollar could potentially be defaulted on completely, said U.S. Rep. Ron Paul, R-Tex., a keynote speaker at the Kitco Metals eConference Sunday.

During the question-and-answer period, the congressman was asked where gold was headed, “Well it depends how low you expect the dollar to go,” he said.

Most likely the Federal Reserve will eventually stop the dollar from sinking and save it, “but if they keep doing what they are doing it is virtually impossible to predict [where gold is headed],” Paul said.  “Under today`s circumstance I think gold will continue to go up in the thousands of dollars in my best estimation,” Paul said.

Paul spoke during the inaugural Kitco Metals eConference that began Sunday Sept. 12 and concludes Monday Sept. 13; the entire conference takes place online.

The congressman said that when he thinks of a position in gold, he thinks ownership of the physical metal. “I like for people to hold their gold as an insurance policy and not so much as an investment,” he said.

He said that central bankers watch gold carefully and might be keeping prices lower. “They know high gold prices are a vote against the job they are doing and I believe they are very much in the business of making sure gold prices are lower. They kept [gold] under US$35 for a long time and then they had to throw in the towel,” he said.

As for silver, Paul said that the explosion in price of this market has been anticipated for quite some time. While before he was doubtful, Paul said it now seems silver, currently sitting at $20 an ounce, might be poised to take off.  

¨The atmosphere today is so much different than when people tried to corner the silver market in the 1970s, $20 silver today looks to me as being very solid,¨ he said.

Paul said he is having a hard time figuring out which is a better investment, silver or gold. “If I had to predict what metal would be better in two to three years time – I think silver might do somewhat better,” he added.

Proposed Gold Audit, Hard Sell

In a pre-conference interview with Kitco News, Paul dropped the news that he will unveil a bill that would audit US gold reserves.

However, during the eConference Paul said his proposed bill will have difficulty passing.  The bill does not have an official name yet but will be unveiled at the start of the new US Congress said Paul in the earlier interview with Kitco News.

“I hope we will have success with getting co-sponsors on this.  There should be no reason in the world that a single person in this country or a single member of congress shouldn`t say ‘transparency of government is good and we ought to know how much gold is there, we might need it someday,’” he said.

Paul said that even if he saw the gold with his own eyes he would still need to find out who really owns it. “Western banks have sold and bought a lot of gold, I won’t know how many agreements they have had or how many swaps they did – so you would need to internally audit what the Treasury and Fed do to find out who owns that gold,” he added.
The gold audit follows his crusade last year looking to audit the Federal Reserve, which he says is the chief culprit behind the economic crisis.

During the question-and-answer period, an attendee argued that the Fed helped stabilize the economy with its decision to bail out the US financial industry. Paul responded that the Fed did have a stabilizing effect solely because it restored a bit of the bubble, it didn’t liquidate the debt. 

“People who didn’t deserve to be bailed out, got bailed out - that is the Freddie Macs and people holding securities,” Paul said.  “You might argue there was stabilization but for whom? What about people that lost their houses?” 

The created stability will not last. “That kind of stability is nothing more than a cancer patient coming in and the hospital says, ‘we don’t want to give you a serious operation we’ll just dope you up with morphine and you’ll feel better,’ I think that `feel better` is limited,” he said.

More Regulations Not Answer

The economy’s downward spiral began in 2000 and things have not improved, Paul said.
“The individuals who predicted the ongoing crisis were never listened to and those individuals were able to protect themselves individually, they knew about the significance of investing in gold and other commodities,” Paul said.

The crisis escalated because of the disbelief that more regulations would solve the problems, he said. 

“So what have we done since 2008? We spent much more, we borrowed much more, we inflated much more and then we pass this financial reform package with massive amounts of regulations in there,” Paul said.

The $3.7 trillion injection by the Fed and Congress has not helped the economy. “There has been no significant increase in the GDP from two years ago; in real terms it is actually down,” he said.

Question Washington

During his 30-minute presentation, Paul said people need to challenge what is happening in Washington, “out of self-defense.”

“The real enemies are those people, that been taught, endorsed and believe whole heartedly in Keynesian intervention…I am an advocate of free market economics, I believe in Austrian economics. I believe in the gold standard, I don’t believe in central banks or fiat money, I believe the answer to problems will be found with sound economic policy,” said the former US presidential candidate. 

There is also a tendency for people in Washington to blame others for their problems, Paul said.

“There is a strong movement in Congress that demands the Chinese raise the value of the renminbi. That will restore trade balances with China, so is said,” Paul remarked. 

The renminbi may be artificially strong, but the US cannot pass judgment since it has an artificially weak currency, Paul said.

“We are manipulating our currency all the time. We are the reserve currency and we are destroying the value of the currency - so for us to be telling people what do with their currency is beyond me,” he said.

Punishing mainland China will not serve the US’ interest long-term. “Our tax on goods will go up; Chinese would end up with fewer dollars and less likely to buy our debt,” he said.

--By Daniela Cambone of Kitco News dcambone@kitco.com

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Missed it the first time? The Ron Paul Presentation will be made available after the closing of the Kitco Metals eConference on Monday September 13 at 4:30 PM ET.  You will need to register to view it: www.kitcoeconf.com. Registration is free.

The Kitco Metals eConference continues all-day Monday, September 13, with presentations from Marc Faber, Puru Saxena and Jon Nadler, register free: www.kitcoeconf.com

Ron Paul
"The individuals who predicted the ongoing crisis were never listened to and those individuals were able to protect themselves individually, they knew about the significance of investing in gold and other commodities," said U.S. Rep. Ron Paul during the Kitco eConference.