According to NIA

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Quantum

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According to NIA

posted on Dec 22, 2013 11:50PM

Gold is currently $1,203.70 per oz and 174,100 tonnes of gold have been mined throughout history. By adding together the currency in circulation component of M1, with total checkable deposits, and total savings deposits at all depository institutions - the real U.S. money supply is currently $9.791 trillion.

Gold rose from a low on April 2nd, 2001, of $255.95 per oz to a high on September 6th, 2011, of $1,895 per oz - for a gain of 640.4% in just over 10 years. Afterwards, gold corrected to a low on June 28th, 2013, of $1,192 per oz - for a dip of 37.1% from its 2011 high.

This is similar to how gold rose from $35 per oz in 1971 to a high of $185.25 per oz on February 24th, 1975, for a gain of 429.3%. Afterwards, gold corrected to a low on August 25th, 1976, of $103.50 per oz - for a dip of 44.1% from its 1975 high. Over the following 41 months, gold made its largest rally in history - rising to a high on January 21, 1980, of $850 per oz for a gain of 721.3% from its 1976 low.

Back in 1980 when gold hit $850 per oz, there were only 87,917 tonnes of above ground gold that had been mined throughout history. That equals just 50.5% of the gold that exists above ground today. There is 1.98X more gold above ground today than there was in 1980.

While above ground gold stocks have nearly doubled over the past 33 years, real U.S. money supply has increased by a much larger percentage. By adding together the currency in circulation component of M1, with total checkable deposits, and total savings deposits at all depository institutions - the real U.S. money supply back in 1980 was only $793 billion. That equals only 8.1% of today's real U.S. money supply. The real U.S. money supply is currently 12.35X larger than it was in 1980.

If we take gold's high from 1980 of $850 per oz and multiply it by 12.35 to account for real U.S. money supply today being 12.35X higher than in 1980, and then multiply the resulting amount by 0.505 to account for above ground gold stocks in 1980 being only 50.5% of current above ground gold stocks today, we get a resulting gold price of $5,301.24 per oz.

Based on real U.S. money supply having grown 6.24X more than above ground gold stocks since 1980, gold's high in 1980 of $850 per oz is equivalent to $5,301.24 per oz today.

Gold could realistically rise to $5,301.24 per oz by 2015-2016, but by then the real U.S. money supply will already be significantly higher, and gold could ultimately rise to $10,000 per oz by 2017-2018.