History of the gold price, from the 20th century to the 2000s

The 20th century began under the gold standard, in use since 1879: this fixed exchange rate system allowed countries to convert their currencies into a specified quantity of gold. At that time, the pound sterling was the leading currency in the world. But with the World War 1, the system began to weaken. In 1934, the US Gold Reserve Act set the price of gold at $35 per ounce (about 31 grams). Between 1944 and 1971 came the period of the Bretton Woods agreements: of all the currencies, only the dollar was convertible into gold and the thus, the two followed almost the same curve.

The year 1971 marked the end of the gold standard and the conversion of gold into dollars. The price of gold was unrestricted! If we look at the price of gold over ten years, we can see that the 70s were marked by a very significant rise. The price of gold rose from 35 to 850 dollars an ounce between 1971 and 1980, in line with the oil crises, galloping inflation and international conflicts. The years 1974 and 1979 were particularly significant for the price of gold. However, when tensions subsided, investors were less concerned and the price of gold fell.

It is January 1980, the Soviets have invaded Afghanistan. In a context of political crisis, uncertainty and cold war, the price of gold reached $850 an ounce. First record for the price of this precious metal. And the figure is even more striking when inflation is taken into account: in 2020, the price of gold in 1980, would have reached 2,800 dollars an ounce. That is all we can say about that period. In 1990, an ounce of gold was worth $400, and fell to $280 in early 2000. Gold was abandoned by investors until the attacks of 11 September 2001, which marked the beginning of a new era in international tension.

Transitioning to 2000: no computer bug in sight, and still no failure of the Mir station. On the other hand, the price of gold will rise dramatically in 20 years: between 2000 and 2020, the price of gold would have risen by 400%. And this gold rush is nothing but a consequence of the economic, financial and health crises that have marked the 21st century.

Apart from the rebound in 2001 to $1,899 per ounce, the price of gold followed a very slight upward trend, almost stagnant, until 2005. From 2006 to 2012, the upward trend continued: in 6 years, an ounce of gold climbed from $555 to more than $1,600.

The first major spike occurred in February 2008, when the ounce of gold peaked at over USD 900. In euro terms, the peak came a little later, in January 2009, with an ounce of gold at EUR 700. This is certainly a consequence of the mortgage crisis, but not the only one. In fact, the European debt crisis is of great concern to investors, who are taking refuge in gold (normal for a safe haven). In 2011, gold broke its second record with a price that jumped to $1,922. In 2012, with the speculation of the end of the world, the price of gold peaked at 1,837 dollars an ounce. And here we go again for a new 6-year cycle: between 2012 and 2018, the price of gold corrects and stagnates, but still fluctuates around 1,000 dollars an ounce.

In 2018, the price of gold rises again and reaches 1,300 dollars an ounce in January. However, it was the Covid-19 pandemic that marked a new record period for the price of gold: in April 2020, the price reached USD 1,686 per ounce. The curve remains below the 2011 level, but not for long. In July 2020, the price of the yellow metal breaks through the USD 2,000 per ounce barrier. The following year will be a real contrast: with no underlying trend, 2021 is a year of pause for the gold price. Another way of affirming gold’s status as a safe haven!

The price of gold varies according to its form. This is one of the special features of precious metals such as gold and silver. The price of bullion coins or collector coins is not determined by their weight in gold. Coins that are highly sought after and/or in very good condition can see their price rise. An example in 2011: the price of the Napoleon coins managed to outperform the gold bullion. The reason? There were hardly any Napoleons available for sale at that time.

The real-time gold price is always interesting, and there is no reason not to watch it. But when deciding whether to buy or sell gold, experts recommend looking at weekly or monthly trends, with more significant movements. This is also what technical analysis of the gold price is for!

It’s hard to say without a crystal ball or a DeLorean time machine to explore the future, especially since there are many factors that need to be taken into account in order to understand gold’s price movements. But given the geopolitical and economic news of 2022, the context of uncertainty and tension seems more favourable to an increase in the price of gold. Wait and see!