The prospects of higher interest rates and rising inflation should send gold to $2,000 in coming years, says Stephen Moore, economist and an editorial board member at The Wall Street Journal.
That would represent a 59 percent rise from current levels.
“Gold is the ultimate refuge for people worried about inflation and worried about the direction of the economy,” he told Newsmax.TV Money.
“I find myself in that category. I think gold prices will go to $2,000 sometime in the next few years. Any savvy investor should hold gold in their portfolio. It’s the best hedge against inflation.”
The economy needs a continuation of the Bush tax cuts, Moore says.
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“If we allow the Bush tax cuts to expire, which would essentially mean a giant tax increase, that would be a torpedo right into this economy,” he said.
“We would see unemployment continue to rise.” The jobless rate now stands at 9.6 percent.
Obama seeks a tax increase only for those with income of more than $200,000. “But those are the people who start jobs, who invest,” Moore said.
“If you’re going to put higher taxes on employers, they’re not going to have as much money to hire more workers. That’s pretty simple economics. Some people in Washington don’t understand that.”
Moore approves of current Federal Reserve policy.
“What we’ve had for the last year from the Fed has been pretty good policy – very low interest rates, and we’ve had no inflation,” he said.
“But this idea of the federal government pouring money into the economy as if we can print money and then print jobs, that’s a fantasy.”
Moore doesn’t think we’ll turn into another Japan. “The American people won’t tolerate economic failure for long,” he said.
“They will demand free markets, lower taxes, Reaganomics policies, which we know from the past have worked. We’re in a ditch now, but I think we’ll get out of it.”
There will be no sustained recovery until the government stops expanding the budget deficit, Moore says.
“It will take a dramatic reversal in policy, but Ronald Reagan showed us when you change policy, the economy can turn around on a dime.”
The housing sector hasn’t bottomed yet, Moore says.
“Part of the reason why we have the foreclosure crisis is that people are losing their jobs,” he said.
“If people don’t have a job or income, they can’t pay their mortgages. It all ties back to this dysfunctional fiscal policy we have under Obama.”
Given his worry about rising interest rates and inflation, Moore is staying away from Treasuries. “There is a risk of a Treasury bubble,” he said.
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