In 1920, the price of gold was $20 per ounce, in 1950 $34 per ounce, and in 1970 $36 per ounce – slow growth – an average of 32 cents/ounce increase per year over fifty years. Almost linear growth. Stable.
1970, though, was a significant year for gold prices – arguably the year in which gold price rises started to grow exponentially. In mid 2011, the gold spot price has just touched $1,800 an ounce. How far will it go?
In late 2010, Robert Zoellick, president of the World Bank suggested that a return to the gold standard should be considered. China last week suggested that in view of the US credit rating downgrade by S&P, a new world reserve currency might be required. Calls for a return to the gold standard are increasing daily. Could it happen? As attractive as it may seem in some quarters, governments would not like it.
In Gate of Tears I forecast that gold would reach $3,500 an ounce by 2017. Today it’s hovering just below $1,800 and has been climbing steeply. Six years to go, and paper currencies generally not trusted.
