Hey Folks;

Seems like we're all getting a little excited about share price and spending and whatever, and like I've stated before, I'm really not convinced that those things matter a whole bunch if you sit back ---relax--- and figure out where this baby is going to take us in the end. I've taken the liberty to paste an article from a Casey Research article released on Nov 22,2011--"Is Gold Still The Answer for Investors" by Bud Conrad.

It's an excellent read from the start, but I'll only post a few pages from the end to show you where we may wind up in the next decade, with gold spiking as it has in the past.The article shows how gold could realisticly hit $12,500-----$24,000---even $$39,000 per ounce in the next decade.

That being said-- do youreally think that the amount of money spent on proving up SLI is going to be anything more than a drop in the ocean.?? Read and judge for your self.

It's been said on this forum before and will probably be said again and again-----------"it takes money to make money" Read and enjoy.!

Rinky

The Long-Term Case for Gold Given that the stars are lining up for gold to continue on the path of resuming its important role as a monetary metal – and given the almost certain collapse in the fiat currency systems that is heralding a return to that role – it is entirely possible that gold could rise at the same rate in the next decade as it has in the last decade.

Therefore, using the same growth rate and extending the gold price as a straight line on a semi-log curve, we can come to the resulting price at the end of the decade. Under this projection, by 2021 the dotted line rises from today's $1,825 to $12,500. (More detail on the method is contained in my book Profiting from the World's Economic Crisis in Chapter 15 on gold.)

The increases due to price inflation and the flight from fiat currencies to gold are combined in the above chart. I think price inflation has been relatively low in the last decade but will certainly rise going forward.

To reflect my forecast for higher price inflation, I separated the two components by calculating the rise in the real price of gold since 2001 and projecting that forward. I then projected a rise in CPI that eventually matches the rise in the inflationary 1970s, when it ultimately reached 14%, and then applied that data to the real price of gold, for a combined projection that is much higher. You’ll see it below as the dotted line with a small curve upward for the increasing inflation that I expect over the decade. The result: gold could reach $24,000 by 2021, a decade from now.

This fits with my scenario of escalating loss of confidence in the dollar and the preference for gold that will be the fallout from continuing huge government deficits.

The chart below establishes the case for the CPI to reach the same 14% level that it peaked at in 1980. It shows both the CPI and gold annual percent changes. The correlation is obvious in the 1970s. The projection for a gradual rising CPI used in the above chart is specified in the rising line after 2011:

This confirms the historical sensibility for a 14% CPI for the more complex two-part analysis, but it is not the only method for calculating a scenario for $24,000 gold.

If gold rose at the rate it did in the 1970s, it would rise well above $30,000 over the coming decade. A visual of that projection is shown in the graph below.

The dashed line on the left shows the fit to the rise from 1971 to 1981 at a bit over 30% per year. Applying that rate of increase to the current price for the decade ahead, as in the dashed line on the right side of the graph, we get to a price of $39,000.

Of course, reality is always more complex than a straight line on a semi-log graph; for example, in the 1970s there was a big pullback in the middle when the first oil shock slowed the economy and disrupted the trend. Also, the 1970s were playing catch-up for gold being fixed to the dollar ever since Roosevelt's hike of the price to $32 in 1934. The point is not to conclude that this is a prediction made with great precision but rather that gold's amazing price acceleration over the past ten years has historical precedent, and much greater gains are certainly not out of the question.

Ultimately, the probability that we will see the sort of projections discussed here will depend on whether the loss of confidence in the dollar going forward will match or even exceed what happened then. Given that things are much worse today than they were back then, I think that is an entirely reasonable scenario, which makes the astounding headline number a very real possibility.

The models are summarized in the following table indicating the gold $/oz expected:

I consider the rising CPI model, highlighted above as the middle case, to be the more likely one, because I expect continued loss of confidence in the dollar over the decade from the spending patterns, out-of-control deficits and Fed actions.

The seasonal aspect of gold investing gives a strong upward bias for the fall season that is not included in these models, so I think a $2,000 prediction for the end of 2011 is a sensible uplift to the short-term prediction.

My projection of $2,500/oz for 2012 represents a 25% increase next year, just modestly above the rises of recent years. In other words, for these predictions to come to pass it does not require an extreme event or major new disruption. The extension for 10 years could easily be much less, or much higher, as the scenarios indicate.

Calibrating the Prediction

I predicted $1,800/oz for the end of 2011 at the beginning of the year. (We started the year at $1,421, so this was an increase of 27%.) For reference, the table below summarizes the view from a variety of well-known sources, which were all lower. My $1,800 was the outlier on the high side.

Predictions help us understand the future, even though they are necessarily fraught with speculation and error. Be cautioned that nobody knows the future precisely, but here I have divulged my methods so you can see how I came to these estimates. Use them with your own judgment.

My conclusion is that we face very serious financial problems ahead. The situation is far more out of control than any previously faced in the United States. I see no way to ever pay off the government debt, and Congress has shown itself incompetent in all things, but especially in applying the brakes to soaring deficits.

Elsewhere, the Federal Reserve has already indicated that it plans to abandon the dollar in favor of printing new money to support the economy and the banks. The combination of both doesn't bode well for the survival of the dollar.

My fear is that the situation will turn out to be much worse than the historically projected trends referenced above, with the price of gold escalating well beyond the numbers shown. So as we go forward, you can use these benchmarks to see whether we remain on a trajectory to significantly higher gold prices.

Of course, if confidence in the fiat currencies erodes to the point approaching failure, the value of gold denominated in worthless paper approaches incalculable numbers – Zimbabwe-like numbers that would be meaningless.

Summed up, until there are fundamental changes in government fiscal and monetary policies – and a recognition that the sovereign debt is unpayable and therefore needs to be restructured – there is no reason to fear gold pullbacks and every reason to expect even more positive returns in the gold mining stocks that are still catching up to the rapid gold rise.

Even higher prices than mentioned here are possible from the flight to safety out of the euro, the seasonal rise into the new year, and the accelerating action of gold from a shift in sentiment of the investment public to a relatively small market. Gold is by far the best "answer," and now is still the best time to invest.

[Historically, gold has always been a great inflation and crisis hedge, and today again inflation is eating away at the meager gains many mainstream investors make. Did you know that if your portfolio grew by even 3% last year, you may have actually LOST money?