The Gold Bug

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 How high can gold go in this bull market?

The answer may surprise you on the upside, as gold is still ridiculously cheap at the current price around $974.

For gold to be equivalent to the 1980 high of $850 -- in real, inflation-adjusted terms -- it would have to rise to
$6,030 per oz. That is a 6-fold rise from the current price.

There are not many things changing hands at 16% of the inflation-adjusted price, but this is the current situation in gold. This is why the current bull market will send gold prices into the stratosphere, far beyond what even the wildest bulls are predicting now.

The Consumer Price Index [CPI] currently released by the government is worthless political propaganda, so we're not going to use it to calculate the true inflation rate. Instead we're going to use the method for calculating the CPI in place in 1980 -- the year of gold's high.

Since 1980, starting with the Reagan administration, changes have been creeping into the calculation of the CPI, mostly due to a nebulous concept known as "hedonic price theory". These methodology changes have been used by every administration since 1980, Democrats and Republicans alike. It's irresistible for those in power, because there are so many political benefits to under-reporting inflation. The foremost benefit is it gets the government out of paying true cost-of-living adjustments

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