Gold Rate - Explaining the 1970s Bull Market

8/7/2019 Gold Rate - Explaining the 1970s Bull Market

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Explaining the 1970s Bull Market

Gold Rate

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1. GOLD CHART OF THE 1970S

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$-$100

$200$300$400$500$600

$700

US$ Per Ounce of GoldLondon PM Fixed Averages 1971 - 1980


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1. At the beginning of the decade the gold rate

was at US$ 35. Ten years later the price was

US$ 870 for one ounce

2. This is a percentage gain of 2,3870%.

3. During the same time the Dow Jones

Industrial Average increased from 809 to 839

points a total gain of 3.7% for the whole

decade

2. BACKGROUND

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1. On a free market, the gold rate is determined

by supply and demand

2. Major factors are the central banks who can

sell and buy gold in large quantities as a

monetary policy, the state of the national and

world economy and international conflicts andcrises

2. BACKGROUND

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1. The 1970s experienced a gold bull market, as

his precious metal could now be nationally

and internationally freely traded after the

Bretton Woods collapse

2. Besides that, demand for gold also

skyrocketed because of the dire economictimes more western nations went through in

this decade

2. BACKGROUND

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1. The 1970s experienced a gold bull market, as

his precious metal could now be nationally

and internationally freely traded after the

Bretton Woods collapse.

2. Besides that, demand for gold also

skyrocketed because of the dire economictimes more western nations went through in

this decade.

2. BACKGROUND

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1. Their economies were characterized by low

growth, high inflation, a high unemployment

rate and increasing national debt and an

expansion of money supply, which basically

made their currencies less valuable.

2. All these factors let investors diversify theirportfolios towards material assets, and gold in

particular.

2. BACKGROUND

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1. Other factors for an increase in the gold rate

were the oil crisis, the Iranian revolution and

the Soviet Unions invasion ofAfghanistan.

2. BACKGROUND

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2. BACKGROUND

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$-$100

$200$300$400$500$600

$700



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1. 1971:Devaluation of US dollar

2. 1st May 1972: One ounce of gold has a

v

alueof more than US$ 50. This is for the first time

after Black Friday (1864)

3. 19th May 1973: End of the Bretton Woods

System, the post-war monetary order whichregulated currency exchange rates and setting

a fixed gold-dollar conversion rate

2. TIMELINE

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1. 14th May 1973: Gold leaped for the first time

in London to over US$ 100

2. 14th November 1973: Limitations on gold

trade were lifted

3. October 1973 until March 1974: Oil crisis

caused by members of the OPEC whodeclared an oil embargo. This led to dramatic

effects on national economies

2. TIMELINE

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1. 1975: Trading in gold futures began at the

New York Commodity Exchange (COMEX)

2. 21th December 1974: US President Gerald

Ford allowed the private possession of gold;

other countries followed suit

3. 7th/8th January 1976: Jamaica agreement:floating exchange rates

2. TIMELINE

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1. 1979: Iran revolution to overthrow Irans

monarchy

2. 27th December 1979: Gold traded for more

than US$ 500

3. 4th November 1979: Iran hostage crisis

2. TIMELINE

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1. 24th December 1979: Invasion of

Afghanistan by the Soviet Union

2. 21st January 1980: The London Bullion

Market reported a gold price of $850, the

Commodity Exchange of New reported a

gold rate of US$ 873

2. TIMELINE

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2. TIMELINE

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$-$100

$200$300$400$500$600

$700



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Gold Rate - Explaining the 1970s Bull Market

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