A sampling from today's Shadow Stats newsletter by John Williams is below. I want to highlight that the true inflation-adjusted high for gold is $6,746/oz and $392/oz for silver. KEEP YOUR EYES ON THE PRIZE.

I am sorry if other people do not take as long-term of a view as I do, or think I am a cheerleader. But in my view, inflation is going to get worse than in the 70's, and gold and silver will top their previous highs, and the companies that have gold in the ground selling for $15-25 dollars an ounce will not go under, they will skyrocket. I have studied the history of currencies and long-term economic cycles and I understand that this is where we are heading, and I am willing to wait for the ride.

Those who do not understand the fundamentals of what is going on will be shaken out. I am hanging on for 10, 100, or 1000 times my initial investment, which is what these juniors will be worth when gold prices reach their climax.

To those who would rather try to short financials for a 20% gain or trade in and out of gold, I wish you the best. I, personally, am in this for the main event that is coming.

Hysteria

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Gold and Silver — The currency market intervention following the Bear Stearns collapse and the Federal Reserve’s related support of the system in mid-March likely also involved direct manipulations of the market in precious metals. The Fed and U.S. Treasury were looking to kill the bullish sentiment for gold and silver — then at near-term highs — along with attempting to sell the faux concept of a fundamental turn in the U.S. dollar. At least one major then-investment bank invested significant funds and took major positions to help topple gold and silver and to help rally the U.S. dollar.

Gold has been pummeled, falling from its all-time high London afternoon fix of $1,011.25 per troy ounce on March 17th, to a low of $740.75 on September 11th (with intervening extreme volatility and with prices approaching $700 at one point), a decline of 26.7%, before rallying 21.8% to $902.00 on Friday (September 26th). In like manner, silver plunged from its March 17th high of $20.92 per troy ounce, to $10.66 on September 11th, a hit of 49.0%, before recovering 23.6% to $13.18 on Friday (September 26th).

The savage beating in gold and silver prices has been accompanied by extraordinary price swings. Such volatility likely will continue, as should will official attempts to discourage investors from investing in gold and silver. Nonetheless, the underlying fundamentals for gold and silver could not be better. Current distortions in market prices have led to increasing physical shortages of gold and silver coins. Inflation and monetary/fiscal pressures, and systemic and political instabilities will tend to get worse, feeding into gold’s value as an inflation hedge as well as a safe-haven investment. The long-term outlook for gold remains extremely bullish, with recovery to $1,000-plus levels and higher likely sooner, rather than later, with silver following.

For August (based on Kitco.com), the monthly average London gold afternoon fix was $839.02 per troy ounce and should average around $830 for September, versus $939.77 in June. Silver averaged $14.69 per troy ounce in August and should average around $12.40 for September, down from $18.03 in July. Respective closing prices on September 26th were $902.00 and $13.80 per troy ounce.

Inflation-Adjusted Historic Gold and Silver Highs. Outside of the current period’s March 17th high of $1,011.25, the earlier all-time high of $850.00 (London afternoon fix, per kitco.com) of January 21, 1980 still has not been hit in terms of inflation-adjusted dollars. Based on inflation through August 2008, the 1980 gold price peak would be $2,394 per troy ounce, based on not-seasonally-adjusted-CPI-adjusted dollars, and would be $6,746 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars.

In like manner, the all-time high price for silver in January 1980 of $49.45 (London afternoon fix, per silver institute.org) has not been hit since, including in terms of inflation-adjusted dollars. Based on inflation through August 2008, the 1980 silver price peak would be $139 per troy ounce, based on not-seasonally-adjusted-CPI-adjusted dollars, and would be $392 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars.

Extreme near-term gold and silver price volatility likely will continue. Upside price pressures from mounting inflation, loss of confidence in the dollar and increasing global political, financial and systemic instabilities, face offsets with bouts of profit taking and market distortions from intense overt and covert central bank interventions in the precious metals and currency markets, aimed at propping the greenback. Despite any central-bank machinations or intervention, the upside potential for gold and silver remains explosive.