Download - 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
$700
US$ Per Ounce of GoldLondon PM Fixed Averages 1971 - 1980
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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
$700
US$ Per Ounce of GoldLondon PM Fixed Averages 1971 - 1980
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