Why economic growth could be good for gold prices...

JOHN KAISER has proposed a graphic model that relates the value of all above-ground gold stock to global Gross Domestic Product (GDP), thereby explaining why higher real Gold Prices — even with a recovering American economy — will be the new reality.

Kaiser, a mining analyst with over 25 years' experience, is editor of Kaiser Research Online. He specializes in high-risk speculative Canadian securities and the resource sector is the primary focus for an investment approach he developed that combines his "bottom-fishing strategy" with his "rational speculation model."

He shares his projections about where both Gold Prices and the US economy could be going in the future in this interview with The Gold Report.

The Gold Report: Intel Cofounder Andy Grove wrote an article in BusinessWeek bemoaning the fact that US entrepreneurs in both the hightech and cleantech realm have become inefficient in the return of jobs created per investment Dollar basis. He said companies hire fewer employees as more work is done by outside contractors, usually in Asia. He suggested this is a problem not only for low-grade production jobs but also robs the US of its innovation edge, hurting the country's overall economic prospects for the future.

Your economic research illustrates this manufacturing decline and shows the value of gold stock values over the last four decades mirroring the US GDP. Why is consolidating manufacturing and research important for US and global growth and how is it linked to the Gold Price?

John Kaiser: A lack of physical manufacturing stifles innovation because without access to support facilities, machine shops, test labs and other resources normally associated with a full-scale manufacturing operation, creative people don't see problems, quickly test solutions and have the ability to bring products to scale in a controlled environment. Cut off from manufacturing operations, development stalls.