There was recently an article on LewRockwell.com by Jeff Clark, who is an editor at Casey Research. His short articles's main theme is that there is a high correlation between the gold price and the adjusted monetary base. He uses the time period of 2008 to the present.
Clark says that based on that correlation and on what the Fed says it is going to do with QE3, that we will see $2,300 gold by January 2014.
While it is certainly an interesting correlation to note, I just want to warn readers that it will probably not stay this way.
The time period of less than 5 years is a short one. In his article, he references January 2008. But the chart that is shown actually appears to start in October 2008, which is right around the time of the major crash. Gold went way down from its highs during that time. This was also the beginning of what would end up being a tripling of the monetary base over the next 4 years.
However, it is important to note that there are many times in history where there was not a strong correlation between the monetary base and the gold price. During the mania of the late 1970's and early 1980's, gold was going up much faster than the monetary base. Meanwhile, during the later 1980's and the 1990's, gold prices stayed low while there was a continuing increase in the monetary base (although nothing like what we've seen recently).
From 2001 to 2008, gold prices approximately tripled, depending on the specific dates you use to measure. The monetary base also went up during this time, but at a much slower pace.
The point is that this direct correlation will probably not hold and it should not really be used as a major predictor of the gold price. It is a major factor, but it is just one factor.
Ironically, gold prices have probably been held back, despite the huge increases in the monetary base. Bank lending has been slow as excess reserves have piled up. In addition, people's fear of a bad economy has kept consumer spending down. This means a lower velocity with a higher demand for money. This actually somewhat counteracts the inflationary policies of the Fed.
So if banks start lending more and if velocity picks up, then I would actually expect gold prices to increase faster than the monetary base. So if Helicopter Ben does as he promised, then a gold price of $2,300 by January 2014 may actually be a rather conservative estimate. It will mostly depend on future inflation expectations and the mood of the people. Of course, Congress can just exacerbate the situation at this point by continuing to spend recklessly and racking up more debt.