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Here is one of the most important reasons that NIA will be featuring in its report:
Even though QE3 has ended, the Fed is expected to at least maintain the current size of its balance sheet moving forward. In December 2014, the Fed Monetary Base averaged $3,900 billion and gold averaged $1,200 per oz for a gold/monetary base ratio of 0.308 – up slightly from October’s all time low gold/monetary base ratio of 0.303.
Going all the way back to 1918, the median gold/monetary base ratio has been 1.063. We last had a gold/monetary base ratio above the long-term median in March 2008 when it reached a peak of 1.128.
Following the inflationary crisis of the 1970s, the gold/monetary base ratio reached a peak monthly average in January 1980 of 5.106. The all time high monthly average gold/monetary base ratio of 5.159 was reached in July 1933 during the Great Depression.
As the Fed’s monetary inflation works its way through the economy, NIA expects the gold/monetary base ratio to return to its long-term median of 1.063 at a very minimum, which would currently equal a gold price of $4,189.28 per oz. If we see US price inflation begin to spiral out of control like the 1970s, we could easily see the gold/monetary base ratio return to 5+ for a gold price of $19,700+ per oz. The bottom line is, with gold below $1,300 per oz, there is very little downside but astronomical upside.
See the chart at the site:
http://inflation.us/why-gold-prices-will-rise-dramatically-very-soon/
