Is a "Bubble Crisis" developing in America and how could it unfold?

The way I would see it unfolding is I think we say in our book, "Phase 1" and "Phase 2."

Phase 1 is basically continued problems in the housing market. We'll continue to put some pressure on the stock market; pressure on the dollar will also put pressure on the stock market. At a certain point, you go down to a level and I don't know exactly what it's going to be, stock market falls a bit, housing goes down, dollar goes down the next few years-- 2 to 3 years.

At that point, things start to get very unstable and you could reach what we call, "Phase 2." Where at that point you could reach the point of a rational panic. At some point, enough people in the crowd say, "I'm not willing to take a risk on the dollar any more, I'm only getting 1% more on my dollar investments than I am if I just invested in European government bonds. I'm not going to do it." That could only be about 10% or 20% of the crowd, but they start to go. Once they start to go, a lot of people could follow. Rationally, everybody should get out as fast as they possibly can; last one out is the rotten egg.

So Phase 1, you know, expect things to be ok, pressure, some downward pressure over the next couple of years, and then a Phase 2 drop. The joke I use, people ask Mark Twain, "How'd you go bankrupt?" He said, "Well, at first very slowly and then very suddenly." That's exactly how I think this will go.

The other issue to look at is the unknown shocks. I've mentioned before shocks in the Middle East, and 911, the things we can't predict could easily shorten that time frame. Which is one reason I wouldn't, even though it might be ok to hold off on investing in gold for some years, I wouldn't do it, because a shock could change it at any time. It could even basically bring you right to Phase 2 if the shock is big enough. So a few years, Phase 1, and then Phase 2 it could really fall off the cliff. Between now and then, shocks could change all of that.