All posts by johnn Katz



Supply Shock and Awe

“If the mid-80s’ supply-driven oil crisis is a guide, we should expect further declines and a prolonged period where oil prices remain depressed.”Scott Minerd. CIO Guggenheim Partners”    Read more

Chart of the Week: Supply Shock Suggests More Downside Risk for Oil

Will the Oil Plunge Mirror the Mid-80s’ Supply Shock?

Source: Haver, Bloomberg, Guggenheim Investments. Data as of 1/8/2015.


Dollar, Gold and Oil - Historical Chart: Compares the movement in the real dollar index with gold and oil prices since 1974.  The oil and gold series are adjusted for CPI inflation and the real dollar index is adjusted for the relevant trading partners own currency inflation rates.


Safe Haven and Gold Standard Hype :

Pundits are again making the spurious case for gold as a  safe haven even though gold has not been a safe haven since the Bretton Woods Gold Standard was consigned to history in the 1970s –  and  subsequent  gold price volatility has completely negated the safe haven myth.

Inflation Driven Gold Price Expectations:

The interactive chart above reveals cause and effect relationships affecting gold prices including the greatest peacetime inflation in history that followed after OPEC boosted the oil price from $3 in 1973 to $12 in 1974.

The Goldwatcher (pages 78 and 79) adresses the gold price spike that followed and quotes Nobel Laureate economist Robert Mundell:

‘The world thus moved onto a pure dollar standard without  a reciprocal obligation for gold convertability  ……….what followed was in reality a global fiat money establishment with economic growth funded by credit expansion. The great inflation of the 1970’s was a consequence of the rapid expansion of credit….inflation was worldwide and became a major problem in the US. Over twenty years from 1952 to 1971 US wholesale prices rose by less that 30%. In the eleven years from 1971 they rose by 157%. In Italy and the UK prices more than tripled.’

 Gold in a deflationary environment:

By contrast we are now in a deflationary environment. The oil price has already fallen by some 50% over the last few weeks.

Might  weakness in the oil price lead to more weakness in the gold price? A case can be made why it might  and, were it not for current global macroeconomic threats, it would.

The LBMA Annual Price Forecast Competition for 2015:

The  annual compendium of 2015 LBMA precious metals price forecasts in 2015  will be published within a few weeks.   From forecasts already published and on current indications forecast prices for gold will probably be in a range between a low of $1000 and a high of $1300. Analysts with a very bearish outlook may forecast a low price below $1000. Those with a very bullish outlook may forecast a high in the range of $1400 and, with dramatic and  seismic changes in global economic and geo-political conditions current expectations could change

All serious analysts will  base their forecasts on expected cause and effect relationships and, as has been the case over many years, the LBMA forecasts should be useful in defining reasonable expectations for gold prices.


About Me, The Goldwatcher & The Globewatcher

I started blogging on gold in March 2007 after Wiley  commissioned me to write

The Goldwatcher – Demystifying Gold Investing.


The Goldwatcher was published in 2008.  Within a few months after publication The Lehman Brothers liquidation and the Global Financial Crisis folIowed.   Since thenThe Goldwatcher blog has been more and more about geopolitics and macroeconomics and less and less about gold.

The Goldwatcher blog published from  2007 to late 2014 was corrupted in the course of a software download. Previous Goldwatcher postings will be included in this blog as soon as the website is restored.

This new  Goldwatcher  blog  will initially headline news and comment on matters affecting supply and demand for gold and the gold price. has commenced headlining news and comment on macroeconomic and geopolitical issues

Commentary and analysis on both sites will follow when the book on moneyprinting I am presently writing reaches the editor.

Thank you for visiting us 

John Katz –

Twitter: @JohnKatzGoldwatcher