If gold and silver come anywhere close to mimicking the performance of the last great bull market of the 1970s, tremendous upside remains. From their 1971 lows to January 1980 highs, gold rose 2,333%, while silver advanced an incredible 3,646%. Were those gains applied to the 2001 lows for gold and silver we would see a peak price for gold of $6,227 per troy ounce and $160 ozt. for silver. Those prices would represent increases of 250% (from around $1,780 for gold today) and of 300% (from around $40 for silver today), respectively. [If you believe that the aforementioned is at all possible shouldn’t you be buying all that you can at today’s current prices?] Words: 1283
So says Jeff Clark (www.CaseyResearch.com) in an article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
Clark goes on to say, in part:
How much return can we realistically expect in each metal at this point – and is one a better buy than the other? There are dozens of ways to calculate price projections, but I’m going to use data based strictly on past price behavior from the 1970s bull market.
Peak Gold & Silver Prices Based on CPI-U Statistics
First, let’s measure what today’s inflation-adjusted price would be if each metal matched their respective 1980 highs, along with the return needed to reach those levels:Returns Needed to Match Inflation-Adjusted Price
Percent Climb to
Match 1980 High
Gold $2,330 30% Silver $136 246%As of 9-19-11
Based on the CPI-U (the government’s broadest measure of inflation), gold is a couple of jumps away from matching its 1980 high of $850. Silver, meanwhile, has much further to climb and would return over three times our money if it reached its former peak.
Peak Gold & Silver Prices Based on Shadow Government Statistics
The CPI is a poor measure of real inflation. Let’s use John Williams’ Shadow Government Statistics calculations. His data are much closer to the real world, and the statistics are calculated the way they were during the Carter administration, stripped of later manipulations. Check out how high gold and silver would soar if they adjust to this level of inflation:Returns Needed to Match ShadowStats Alternate CPI
Metal Price to Match
Percent Climb to
Gold $15,234 755% Silver $348 785%As of 9-19-11
Clearly, both metals would hand us an extraordinary return from current prices. Those are some admittedly high numbers, but keep in mind that’s what the CPI figures above would register if government officials had never changed the formulas. What’s tantalizing about these levels is that we’re not even halfway to reaching them.
Gold & Silver Prices Based on 1970s Performance
Let’s look at one more measure. I think another valid gauge would be to apply the same percentage gain that occurred in the 1970s. From their 1971 lows to January 1980 highs, gold rose 2,333%, while silver advanced an incredible 3,646%. The following table applies those gains to our 2001 lows and shows the prospective returns from current prices:Returns Needed to Match 1970s Total Percent Gain
Metal Price to Match
1970s Total % Return
Percent Climb to
Match ’70s Return
Gold $6,227 249% Silver $160 307%As of 9-19-11
Gold would fetch us two-and-a-half times our money, while silver would provide a quadruple return.
Regardless of which measure is used, it’s clear that if gold and silver come anywhere close to mimicking the performance of the last great bull market, tremendous upside remains.
One might be skeptical because these projections are based on past performance, and nothing says they must hit these levels, [and] that’s a valid point, but I would argue that we’re in uncharted territory with our debt load and money creation – and neither shows any sign of ending. We had a lot of problems in the 1970s, but our current fiscal and monetary abuse dwarfs what was taking place then. The need to protect one’s assets gets more pressing each day, not less so. That to me is the key signaling this bull market is far from over.
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One may also be skeptical because the media continue to claim gold is in a bubble. To date their proclamations have been nothing but a great fake-out, every time. Want to know when we’ll really be in a bubble? When they stop saying it’s one and actually start buying and recommending gold. When they begin running 15-minute updates on the latest gold stock. When you are sought out relentlessly by your friends and relatives because they know you know something about all this “gold and silver stuff.”
All told, I think the baked-in-the-cake inflation, rooted in insane debt levels and deficit spending, will be one of the primary drivers for rising precious metals this decade. This means the masses will look for a store of value against a plunging loss of purchasing power. Enter gold and silver.
The current correction may not be over, and we can count on further pullbacks along the way but the data [above] suggest the upside in gold and silver is much bigger than any short-term gyration – or any worry that may accompany it.
A tsunami doesn’t start with a bang, but with a whimper. The first sign is a little hump in the water way out in the distance that is barely notable. Anyone who catches a glimpse of it simply continues to expect the day to be the same as the last many days – calm and beautiful waters along the shore. This is the point where we are, today in the Precious Metals sector. Many have seen the little roll of water out in the distance as Gold edged up in the first move of a more parabolic slope, yet most investors are mired in the same expectations of yesterday – a return for Gold to correct down into a lower base. Our analysis based on the fractal relationship to 1979 shows, however, that the mid 900s are a realistic target for the HUI by the end of the year or early in 2012; that $52 to $56 should be achievable for silver, with $58 to $62 as real possibilities; and that Gold should go the $2250 level followed by $2500 with the potential for $3,000, or a bit higher, now on the radar screen. Let me explain why that is the case. Words: 2130
100 of the 150 analysts who have gone public in maintaining that gold will eventually go to a parabolic peak price of at least $2,500/ozt.+ before the bubble bursts believe that gold will reach at least $5,000 per ozt. Take a look here at who is projecting what, by when. Words: 970
The parabolic rise in Gold and in Silver still have a very long way to go as measured directly off of the late 1970’s Charts. In fact, we expect the arithmetic ratio targets for Gold and for Silver, based on the late 1970’s rise for each, to get blown away since we are seeing a logarithmic rise in dollar inflation compared to the late 1970’s. We have just hit the point where the more parabolic rise in Gold set off the leverage for the Gold Stocks in the late 1970’s. Therefore, we expect the real parabolic PM Stock Index Bull is just now commencing. Let me explain. Words: 1769