The Visual Capitalist recently published an overview of gold price movements over the past 100 years. Gold is mostly valued in US dollars on world markets, so price movements are expressed in USD / oz. The chart data ends in May 2020, when the price of an ounce of gold was $ 1,726.
The graph brings to readers the most visually important milestones in the history of gold, as well as in the history of the economy, which has led to fluctuations in the price of gold. In just over a hundred years, the price of gold has had a 92-fold increase (9135%) – from $ 20.68 to $ 1,910 (as of October 14, 2020). Of course, inflation and the sharp change in the value of the dollar must also be taken into account.
In the following, we will highlight the largest gold bull movements since 1969
The first major gold price rally in 1969-1980 – End of the Gold Standard
- 1969 – Nixon becomes President of the United States and the Fed raises interest rates. (2)
- 1971 – Leaving the Gold Standard. On August 15, 1971, Nixon instructed the Federal Reserve to stop honoring the US dollar´s value in gold at a fixed value. (1)
- 1974 – The new President Gerald Ford allowed once again gold bullion to be privately owned.
- By January 1980, the price of gold reached $ 2,234 per ounce in today’s dollars amidst an environment of double-digit inflation. Federal Reserve Chairman Paul Volcker fought this inflation with double-digit interest rates which in turn slowed the economy, causing a recession. (1)
- From December 1969 to January 1980, gold rose from $ 285 to $ 2,234 per ounce, an increase of 684% over 122 months, in inflation-adjusted terms. (1)
Another major gold rally in 1999-2011 – Two economic crisis: The Tech Bubble and The Global Financial Crisis in 2008
- In 2000, there was the first giant tech boom when Internet businesses gained popularity very quickly. The tech-bubble grew rapidly due to a large number of speculative investments. Many companies could not stay sustainable. As a result, in 2000, investors rushed to give up their tech-investments, resulting in several market crashes. The year 2000 is also known as the year of “dot-com-bubble”
- On November 9, 2001, one of the largest terrorist acts in history took place, where planes flew into the twin towers. It is also called the beginning of a new era. Gold rose steadily during this period.
- In 2008, financial markets were shaken by the global economic crisis, which once again boosted the price of gold.
- By the end of 2011, gold had reached new all-time highs.
- From August 1999 to August 2011, gold rose from $ 394 to $ 2,066 per ounce, an increase of 425% over 145 months, in inflation-adjusted terms. (1)
The third major gold price rally in 2015-2020
- As a result of the global economic crisis, the Federal Reserve injected cheap money into the financial markets to keep the economy afloat. By December 2015, the price of gold was only $ 1,050 an ounce.
- After the 2016 presidential election, the price of gold began to rise again.
- The pressure to raise interest rates, the economic war with China, and the COVID-19 pandemic, have pushed the world economy into “uninhabited territory”
- From November 2015 to May 2020, the price of gold has risen from $ 1,146 to $ 1,726 per ounce, 55% over 55 months. (1)
Gold has proven its value over time when companies, currencies, and governments come and go.
Disclaimer: This article is for informational purposes only and is not intended as an investment analysis or recommendation to sell or buy commodities. Tavex is not responsible for any decisions made based on this information. Investing is associated with opportunities and risks, and the market value of commodities can both increase and decrease. Past or future yields on the commodities and financial ratios shown above do not represent a promise or an indication of future earnings.