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Purpose2012
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5 Reasons Gold Will Set an All-Time Record In 2013

- Aubie Baltin -

Great article, but I think you’re far too bearish : ) Here’s a seventh reason : scarcity.

Global gold production is reckoned (by the US Geological Survey) to be about 2,600 tons per year : that’s 83,590,000 troy ounces.
At the current price ($1600) that’s worth $133,744 million.

Meanwhile, the world’s GDP is reckoned at about $70 trillion. The top 1% of wage earners take 10% of that; so their yearly income ($7 tn) is about 52 times the value of all the gold mined.

Even mainstream financial institutions like HSBC and UBS have advised their clients to hold 5%-10% of their money in gold; so let’s imagine that just “the 1%” decide to follow that advice, and attempt to put 10% of their yearly earnings into gold: that would be $0.7 tn of cash chasing $0.133 tn of gold – a ratio of 5.2 to 1 (as the world cannot simply ramp up gold production at will). What should theoretically happen in a ‘free market’ would be that the gold price would go up 5.2 times to compensate, giving a price per ounce of about $8,320.

If the top 5% of global wage earners – who take home 25% of the world’s money, i.e. $17.5 trillion – try to put 10% into gold, that would be $1.75 tn chasing $0.133 tn of gold : a ratio of about 13 to 1. So on that basis, I honestly believe that the price could go to (13 x $1600) = $20,800.

And that’s presuming the rich don’t use any of their *savings* to buy gold...

- Happy investing !

Commented 4056 days ago

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Beginning of the headline :No two bull markets are ever exactly the same and gold is no exception. During the last secular gold bull market in the 1970s, gold rose from $35 in 1968 all the way to $200 by late 1974. Then completely unforeseen the unthinkable happened. Between late 1974 and mid-1976, gold prices were cut in half, dropping from about $200 to $100. At the time, many Gold Bugs sold out in fear & disgust. But then the unimaginable happened again; Gold prices started to climb and climb, rising from $100 in mid-1976 all the way to $800 by January 1980. Anyone who bought gold at $35 earned better than 20 times their investment. But most of that rise occurred in just the last two months of 1979... Read More

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