In 2003, electronic trading funds (ETFs) began trading gold, and the Gold Price Per Gram skyrocketed as individuals were allowed to own gold in the United States for the first time in decades. This was followed by a crazy bull market for precious metals with a sudden end. Gold has been known and coveted almost everywhere in the world for thousands of years. In addition to its function as a means of payment, in the form of coins, it was used to support long-term assets. Awareness of the value of gold has increased over time.
This, combined with its limited availability, means that gold was also used to support currencies, especially under the new Bretton Woods monetary system introduced after World War II. At the time, the United States held nearly two-thirds of the world's gold reserves. With the aim of giving stability to the world's currencies and stimulating international trade, the US dollar was thus linked to it. Over the years, member countries of the system accumulated such vast reserves in U.S.
dollars due to their current account surpluses that they surpassed U.S. gold reserves. The agreed conversion rate of 35 U.S. dollars per troy ounce of gold became virtually inapplicable and confidence in the US dollar was lost.
price of gold between 1971 and 1981 In 1971, the United States finally decoupled the dollar from gold (the “Nixon shock”) and, in 1973, the Bretton Woods system came to an end. Since then, gold has played a negligible role in international payment transactions. This trend was also driven by geopolitical crises. Gold reached its all-time high in January 1980, two months before the start of the hostage-taking at the United States embassy in Iran.
Less than a month earlier, the Soviet Union had invaded Afghanistan. . As in subsequent crises, buyers saw gold as a (supposedly) safe haven. However, the markets were not as developed or as liquid as they are today.
A lot of people were betting on the same idea and, consequently, price movements were extreme. After being banned for decades, U.S. private investors may also lack the expertise needed to deal with the “new asset class”. In his 1969 article “Speculations on Gold Speculation”, the well-known economist Fritz Machlup concluded that the price of gold, of 35 US dollars per troy ounce, which was applied in Bretton Woods, would decrease significantly if government demand ceased to exist.
The wild 1970s and the subsequent falls in the price of gold have been engraved in the memory of many investors. Only after a 20-year bear market did interest in precious metals slowly return. Unlike then, gold today tends to be used for portfolio diversification purposes. Since then, there have been no excesses like those of the late 1970s.
Perhaps even before 1961, when buying pressure was such that the London Gold Pool was introduced to “stabilize” the price of gold. Today, gold is an asset class in its own right and differs from other metals used in manufacturing, such as silver, platinum and palladium. If we look only at the US dollar, as Mark O'Byrne of Goldcore observes, gold rose 49.7% against it in 1972. He believed that the idea that gold has a permanent intrinsic value was a myth purported by central banks. The enduring trend in gold ended at a time when the rate of inflation in the US.
UU. reached double-digit levels. If I am right, gold's upward movements will become less paused and will increasingly resemble the violent rises of the 70s. If every ounce of this gold were put together in a large cube, each side would measure approximately 21 meters.
The strongest currency has been the Australian dollar, against which gold has achieved average annual gains of 11.7%. You could say that the last bull market for gold began on August 15, 1971, when the President of the United States, Richard Nixon, “closed the gold window”. In 1971, the United States finally decoupled the dollar from gold (the “Nixon shock”) and, in 1973, the Bretton Woods system came to an end. When the ban on gold in the United States was lifted in late 1974, the price had risen to nearly 200 U.S.
dollars. The following Goldmoney chart shows the annual percentage increase in gold since 2001 in the nine major world currencies. .