Investment demand drives prices. Prices drive mine production, secondary recovery from scrap, and fabrication demand.
Second, CPM Group issued a long-term gold buy recommendation in releasing its Gold Survey in November 2000. We laid out the case that there was about to be an upward shift in the investment demand curve: More investors and more types of investors in more parts of the world would want to buy more gold for a longer period of time than ever before.
The result of this gold renaissance would be that gold prices, then around $260 per oz., would rise far beyond the 1980 record $850 and stay there for decades.
Historic trends
Prior to 1980, hostile economic and political trends would cause investors to buy more gold for a year or two. After such a period, conditions would improve and investors would buy less gold. Gold prices would subside until the next one or two-year set of crises would start the…
