• 4 minutes China 2019 - Orwell was 35 years out
  • 7 minutes Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 11 minutes Trump will capitulate on the trade war
  • 14 minutes Glory to Hong Kong
  • 13 hours PETROLEUM for humanity 
  • 14 hours Why don't the other GOP candidates get mention?
  • 3 hours China's Blueprint For Global Power
  • 4 hours Yesterday Angela Merkel stopped Trump technology war on China – the moral of the story is do not eavesdrop on ladies with high ethical standards
  • 14 hours Disenfranchised people are angry people - map of global electoral systems
  • 13 hours Brexit agreement
  • 13 hours Bloomberg: shale slowing. Third wave of shale coming.
  • 2 hours ABC of Brexit, economy wise, where to find sites, links to articles ?
  • 1 min Erdogan Holds All The Cards ... 3.6 Million Of Them
  • 19 hours Spain Is On The Edge...Clashes Between Catalonia And "Madrid"
  • 2 hours Idiotic Environmental Predictions
  • 21 hours Philadelphia Energy Solutions seeks to permanently shut oil refinery - sources
Alt Text

Did These Mining Giants Just Confirm The Next Gold Frontier?

After Ecuador’s President removed a…

Alt Text

Can Mali Maintain Its Gold Mining Status?

Mali could be about to…

Alt Text

Where Did Gold Come From: Black Holes, Aztecs And The Gods

Humanity’s obsession with gold has persisted…

Mad Hedge Fund Trader

Mad Hedge Fund Trader

John Thomas, The Mad Hedge Fund Trader is one of today's most successful Hedge Fund Managers and a 40 year veteran of the financial markets.…

More Info

Premium Content

The Ultra Bull Argument for Gold

I am constantly barraged with emails from gold bugs who passionately argue that their beloved metal is trading at a tiny fraction of its true value, and that the barbaric relic is really worth $5,000, $10,000, or even $50,000 an ounce (GLD).

They claim the move in the yellow metal we are seeing is only the beginning of a 30 fold rise in prices similar to what we saw from 1972 to 1979, when it leapt from $32 to $950. So when the chart below popped up in my in-box showing the gold backing of the US monetary base, I felt obligated to pass it on to you to illustrate one of the intellectual arguments these people are using.

Gold Backing of the US Monetary Base

To match the 1936 peak, when the monetary base was collapsing, and the double top in 1979 when gold futures first tickled $950, this precious metal has to increase in value by eight times, or to $9,600 an ounce.

I am long term bullish on gold, other precious metals, and virtually all commodities for that matter. But I am not that bullish. It makes my own three year $2,300 prediction positively wimp-like by comparison.

 The seven year spike up in prices we saw in the seventies, which found me in a very long line in Johannesburg to unload my own krugerands in 1979, was triggered by a number of one off events that will never be repeated.

Some 40 years of demand was unleashed when Richard Nixon took the US off the gold standard and decriminalized private ownership in 1972. Inflation then peaked around 20%.

Newly enriched sellers of oil had a strong historical affinity with gold. South Africa, the world's largest gold producer, was then a boycotted international pariah and teetering on the edge of disaster.

We are nowhere near the same geopolitical neighborhood today, and hence my more subdued forecast. But then again, I could be wrong. 

Courtesy: Mad Hedge Fund Trader




Download The Free Oilprice App Today

Back to homepage



Leave a comment
  • Anonymous on July 14 2010 said:
    Agreed.Things are exponentially worse than they were in '79.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play