GOLD’S BULL MARKET ISN’T OVER 145These trends take years to play out and policies work with
a lag. Meanwhile, investors can use recent setbacks to acquire
gold at more attractive prices while waiting for the inevitable
price increase to occur.
■ The Long-Term Gold Outlook
My long term forecast for gold — meaning, over a three-year hori-
zon — is much higher based on fundamentals, the amount of paper
money in the world and the fact that we’re in a global depression.
Money printing by itself won’t do any good, but the central
banks think it will. That alone should drive gold higher over
the longer term because the central banks will keep printing
and risk destroying confidence in the paper currencies.
If they had to restore that confidence, that might also mean
going back to some kind of gold standard, or at least use the
price gold reference point. If deflation is a problem, how do
you get inflation? One way to get inflation is to depreciate your
currency relative to the gold.
You might say to yourself, “What, hypothetically, is the non-
deflationary price of gold if there was a gold standard imple-
mented?” That’s not a matter of making a prediction, it’s an
analytical question. You can do the math on that using available
data. The answer is $7,000 to $9,000.
There’s no central bank in the world that wants a gold stan-
dard. But if we were going to have one and wanted to avoid
deflation of the kind we had in the Great Depression, the price
of gold would have to at least be $7,000 per ounce, probably
higher. It’s closer to $9,000 per ounce. I call that the “implied
non-deflationary price of gold.” That part’s easy, actually.
You can do that math because we know how much gold
there is, how much paper money there is, and we can make
some assumptions about the ratios and confidence levels.
The question then becomes, what would cause central