http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100002059/is-6300-fair-value-for-gold/
Is $6,300 fair value for gold?
By Ambrose Evans-Pritchard Economics Last updated: November 19th, 2009
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He sees an eery similarity between the decision of India’s central bank to buy half the IMF’s entire sale of gold, and the move by France’s central bank to start converting dollars into gold in 1965 — which was, of course, the start of the slippery slope leading to the collapse of Bretton Woods and the closure of the US gold window under Nixon.
In the gold mania that followed, the price rose to levels that matched the US dollar monetary base (it reached 140pc at the peak). If that were to occur today after Ben Bernanke’s go at the printing press, gold would have to reach $6,300 an ounce. The US owns 263m ounces of gold while the Fed’s monetary base is $1.7 trillion. Simple equation.
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Wow!
This portends a very difficult time for the USA.
Gas = 3 $ / gallon ~ 0.0026 oz gold @ 1,150 $ / oz
0.0026 oz * 6,300 $ / oz = Gas 16.43 $ / gallon
At 16.43 $ / gallon, the economy stops. (Pundits have said the stop point is less than $10 / gallon.)
Argh!
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