This is even more remarkable in view of the weak seasonality, and might suggest a new phase in the current bull market. Bull markets in gold are also characterised by two extremely strong human emotions: fear and greed. The combination of these two factors should trigger a parabolic
increase in the last phase of this trend, and as a result we expect the gold price to reach our long-term target price of USD 2,300 at the end of the cycle.

Numerous aspects remind us of the last big bull market in the 1970s. In line with the development in the past decade, central banks were then selling massive amounts of gold prior to the last bull market (especially from 1961 to 1972). The following chart documents the increase in money supply, inflation, and the outperformance of gold in this period.

A look at the inflation-adjusted gold chart puts the most recent price increase and the passing of the (psychologically) important USD 1,000 mark into perspective. On an inflation-adjusted basis, the high of 21 January 1980 (USD 850) amounts to USD 2,300/ounce. Of course this calculation is based on the official data of the Bureau of Labor Statistics. On the basis of the old Shadow Stats calculation model of 1980, gold would have to rise to USD 7,494 in order to exceed the 1980 high in real terms. And when resorting to the MZM (money with zero maturity) supply of 1980, we find that gold would have to soar to almost USD 10,000.

Manipulation vs. intervention

There is a thin line between intervention (normally by the government, government-related institutions, or more generally, politicians) and manipulation (negative connotation – as in “influence”). The (sometimes massive) interventions on the bond and currency (foreign exchange) markets are official and legitimised. The German minister of economic affairs, Rainer Brüderle, has recently confirmed that the Federal Reserve Bank intervenes on the
foreign exchange market. He pointed out that it was normal and customary for the central banks to do so, as every central bank had a target band for the exchange rate of the own currency. It would therefore be naïve to think that this was not happening in the gold market.

This is certainly one of the very best reports on gold that I have seen over the last decade, and there have been many. As the quantity of research reports increases there is eventually a diminution of quality. For gold, too many consist of cheerleading and competing telephone number target prices. Inevitably, there are also the anti-gold comments.

My suggestion is that if you read just one report on gold, make it this one. I know that Ronni Stöferle has been working on it for months, and it shows in the breath of coverage and quality of analysis. Price targets are always guesses, but Ronni Stöferle's seem realistic to me. More importantly, the facts and figures necessary to conduct one's own analysis are all in this report. It is also a good read, containing some memorable quotes. (See also Ronni Stöferle's report on shale gas.)