$2,800 an ounce seems achieveable. I would not want to think what $9,360 would do to the world monetary system. Once the $2,000 level is breached, over time (3 or 4 years?), every gold mine in the world would be producing at maximum production. That in itself should satify the demand and put the brakes on. Where am I going wrong?
Remember 1980 - 1981? Gold price was roughly $23 - $35 for 40 years, then the dollar was taken off the gold standard in 1973 and the stage was set for gold's move to $850 in 1981. That move was $35 up to $850, which is roughly 2400%... ludicrous, right?
The manipulation of gold managed one vitally important achievement; it defined the low-end base price for gold near the $250 level. In fact, we've learned that current production cost of gold is nearly prohibitive for the existence of the gold mining industry under that low-end base price. So now, after years of manipulation, free market forces will take their turn and manage another accomplishment in the history of gold; the free market will determine the high-end base price for gold in reaction to the process which created its low-end price. The pendulum swings both ways, and nothing stops the free market from defining a proper price value.
So, 2400% times gold at $250... okay, maybe $9360 does seem a bit ludicrous. I guess I'd settle for just $6000 an ounce... like most of the goldbugs in 1980 would've settled for just $600 an ounce.
What if the free market is not free anymore as it has been suggested? With the dollar being such an integral part of most all economies will it be allowed to fall dramatically and if so how far(60/50/40/less)? Or will it be intervened by say gold confiscation and redemption at some point? I believe a serious dollar collapse would lead to a global depression. The consequences catastrophic.
The capping of gold prices was one step closer to taking it off the market. Now that that's not working, the next step is no gold! How high would gold have to go until this became a consideration?
Basically, my thought it we're sorry we (the US) did what we did to all of you (rest of world), but we must all really think about how we should move forward. All of our consumers, in each of our countries, have been fleeing to gold in light of depression and currency devaluation.
Will the consumer be stripped of gold's safe haven by a select few?
I'm just throwing all this out there. I would hate to see the conversation die as I believe this is not outside the realm of possibilities.
What about the increases in investment demand as FEAR increases?
At current reported inventories of around 4 Boz, there is only 2/3 oz available for each person on earth. Granted, not everyone will want or could afford a hoard, but of those that can, they will want all that can be bought.