Before the Climb: a brief History of Gold Prices.
First, a quick look at what gold was going in the decades leading up to the climb of the 2000s.
For twenty years starting in the early 1980s, it was not a very pulse-pounding time to be a gold investor. Gold Prices were hovering around $300/ounce, but no real gains or losses were made. The 1970s though had been an exciting decade for gold with the end of the gold standard (pegging gold to $35/ounce) in August of 1971 allowing gold prices to move freely for the first time. Amid strong oil prices, high inflation and geopolitical concerns, gold prices took off and prices shot up to $850/ounce (correcting for inflation that would work out to over $2000/ounce in today’s dollars). Then the bubble burst and, after a bumpy ride for a couple of years, prices levelled out around $300 with very little action.
In the short history of freely floating gold prices, the rapid rise and fall of value in the 1970s demonstrate that the prices can be quite volatile and the stagnation in the 1980s and 1990s demonstrate that prices have not always been rising.
My colleague Gregory Neilson recently shared his thoughts on the inflationary pressure that is affecting gold prices, you can read his blog post on gold prices here.