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Gold’s Largest Price Runs Over the Last 50 Years
The recent surge in gold prices amid political and economic instability is merely the latest instance of gold's value increasing during periods of broader uncertainty. Gold prices climbed in the years following the U.S.'s abandonment of the gold standard in the early 1970s and continued to rise throughout the "stagflation" of the late 1970s and early 1980s. Prices resumed their upward trajectory after the dot-com bubble burst and recession of the early 2000s, then skyrocketed in the wake of the Great Recession. Prices remained elevated post-recession and have accelerated in recent years. These are the largest gold price runs since August 1971, when the U.S. monetary system was removed from the gold standard.
Gold’s Largest Price Runs Over the Last 50 Years
Throughout history, gold has held allure as a precious resource. From its traditional uses in jewelry, coins, and other artifacts to modern industrial and technological applications, gold has always been in demand.
But in the modern economy, one of gold’s most important roles may be as a safe-haven asset during times of economic uncertainty. Gold possesses several critical qualities that have solidified its reputation as a wise hedge against instability. Gold’s conductivity, corrosion resistance, and malleability give it intrinsic value, particularly in electronics. As a physical asset, gold has no counterparty risk, making it safer than some other financial instruments reliant on issuers or other parties. Gold is highly liquid and universally recognized, making it easy to transact. And importantly, gold has historically retained its purchasing power over time, especially relative to currencies and other more volatile assets.
These attributes have been particularly relevant to consumers in recent years as the global economy has navigated the impacts of political turmoil, trade wars, the COVID-19 pandemic, and inflation.
The Dow-to-Gold Ratio Has Leveled Out
Trends in the price of gold demonstrate the
asset’s growing appeal among those seeking a stable, reliable store of wealth
during this period. Over the past five years, the weekly spot price of gold has
increased by more than 70%, from around $1,400/oz. in June 2019 to over
$2,400/oz. in July 2024. Relative to the performance of the Dow Jones
Industrial Average—a common benchmark for gold investors—gold has exhibited
stability. After a sharp decline early in the pandemic, coinciding with a spike
in gold prices and declining stock performance, the Dow-to-gold ratio has
leveled off over the last few years.The recent surge in gold prices amid political and economic instability is merely the latest instance of gold’s price increasing during periods of broader uncertainty. Gold prices climbed in the years following the U.S.’s abandonment of the gold standard in the early 1970s and continued to rise throughout the “stagflation” of the late 1970s and early 1980s. Prices resumed their upward trajectory after the dot-com bubble burst and recession of the early 2000s, then skyrocketed in the wake of the Great Recession of 2008 as the federal government implemented expansionary monetary policies to stimulate the economy. Prices remained elevated post-recession and have accelerated in recent years.
Gold Price Runs Over the Years
The market now finds itself in a longer-lasting
gold run than any since the U.S. fully abandoned the gold standard in August
1971. For the purposes of this analysis, a gold run is defined as a period of
at least six months of spot price growth without a 30% decline. The current
228-week run began in March 2020—when COVID-19 initially disrupted large
portions of the global economy—and has resulted in a 59% increase to the spot
price of gold.While exceptional in duration, the current gold run ranks only eighth in terms of price growth. Many of the gold price runs with the most substantial percentage increases took place in the 1970s. Among the end of the gold standard, post-Watergate political turmoil, multiple energy crises, and rampant inflation, the era was marked by the type of instability that leads consumers to gold. During the largest gold run on record, prices surged more than 300% from November 1978 to January 1980, coinciding with historically high inflation that profoundly impacted the economy.
Below is a breakdown of the top gold price runs since August 1971, when the U.S. monetary system was removed from the gold standard. The analysis was conducted by U.S. Money Reserve—a leading distributor of government-issued gold, silver, platinum, and palladium—using the spot price of an ounce of gold. For complete results, see Gold’s Largest Price Runs Over the Last 50 Years on U.S. Money Reserve.
5. Gold price run of November 1973 to December 1974
Image Credit: U.S. Money Reserve- Percentage change in gold spot price: +115.7%
- Total change in gold spot price: +$104.75/oz.
- Percentage change in Dow Jones Industrial Average: -32.4%
- Number of months: 13
- Fed funds rate at start and end of run: 10.03–8.53%
- Notable historical events: 1973 oil embargo; 1973–1975 recession; President Nixon resigns; inflation reaches 12%
4. Gold price run of August 1976 to October 1978
Image Credit: U.S. Money Reserve- Percentage change in gold spot price: +125.3%
- Total change in gold spot price: +$130.55/oz.
- Percentage change in Dow Jones Industrial Average: -16.4%
- Number of months: 26
- Fed funds rate at start and end of run: 5.29–8.96%
- Notable historical events: Jimmy Carter is elected president
3. Gold price run of October 2008 to August 2011
- Percentage change in gold spot price: +159.9%
- Total change in gold spot price: +$1,159.15/oz.
- Percentage change in Dow Jones Industrial Average: +20.5%
- Number of months: 34
- Fed funds rate at start and end of run: 0.97–0.10%
- Notable historical events: the Great Recession; global financial crisis; unemployment reaches 10%; U.S. credit rating is downgraded
2. Gold price run of August 1971 to July 1973
- Percentage change in gold spot price: +205.4%
- Total change in gold spot price: +$85.05/oz.
- Percentage change in Dow Jones Industrial Average: -4.2%
- Number of months: 22
- Fed funds rate at start and end of run: 5.57–10.40%
- Notable historical events: President Nixon ends the gold standard; stock market crashes
1. Gold price run of November 1978 to January 1980
- Percentage change in gold spot price: +329.0%
- Total change in gold spot price: +$640.35/oz.
- Percentage change in Dow Jones Industrial Average: +6.9%
- Number of months: 13
- Fed funds rate at start and end of run: 9.76–13.82%
- Notable historical events: 1979 oil embargo; Fed implements tight monetary policy; 1980 recession
Methodology
To determine gold’s largest price runs since the end of the gold standard, researchers at U.S. Money Reserve analyzed the latest gold spot price data, the Dow Jones Industrial Average, and the Board of Governors of the Federal Reserve System’s Selected Interest Rates (Daily) - H.15. Gold price runs were defined as periods of price increases exceeding six months. The runs were measured from the point when the gold spot price closed at a local low to the peak price reached during that period. A gold price run was considered to have ended after the spot price declined by more than 30% of the total price gain achieved during that specific run. The researchers also calculated the total change in gold spot price, the percentage change in the Dow Jones Industrial Average, and the effective federal funds rate range during the same period.
Source: https://democratherald.com/