I googled and found that above graph from this site: https://inflationdata.com/Inflation/Inflation_Rate/Gold_Inflation.asp I assume the graph is correct, if not, then tell me. The internet is filled with correct and incorrect information. I want to ask why the price took those various jumps and falls in the last 100 years? What specific events caused them? I clearly remember the newspaper and televisions talked about Finance Crise in 2008, so I understand that the price soared. I also remember in late 2012 and early 2013 Cyprus sold their precious gold in bank, and thus the price of gold fell, fell and fell. And recently the Covid has caused the price to soar again. Now I am not 80 years old and I am not deep in economic history. That is the reason why I will ask why the price of gold soared and fell before. Here we go: I want to ask why the price fell in 1913-1920? That must be World War 1. Right? In 1931 it soared. It must be the Depression. Right? In 1934 and especially from 1940-1970 the price slowly became smaller and smaller. World War 2 did not affect the price? In 1972 it took a huge jump. I know that the Israelis won a war(s) against their Arab enemies, and some dictatorial oil sheiks decided to punish the West with ban on oil export? Has the price something to do with this? From 1988 to 2002 the price slowly fell, but there was a break in 1992-1993. Why? Also, from 2002 and onwards the price soared a little bit. I think it was Finance Crise in 2008 that caused the price to jump, but did 9-11-attack, Iraq-war and Afghanistan-war have effect on it? I hope some seniors here who are in their 60s or 70s might want to explain me what specific events caused the various jumps and falls of the gold price. Remember that English is not my mothertongue, so bear with my poor grammar or bad spelling. Thanks
I also want to ask a specific question about president Franklin Roosevelt. I can read in wikipedia that: "Executive Order 6102 declared that all privately held gold of American citizens was to be sold to the U.S. Treasury and the price raised from $20 to $35 per ounce. The goal was to counter the deflation which was paralyzing the economy." How could he do that? I mean what if some Americans refuted to sell their gold? Did some Americans hide their gold?
From wikipedia: "a violation of the order was punishable by fine up to $10,000,(equivalent to $198,000 in 2019)[5] up to ten years in prison, or both."
That graph is also 2 years old. Gold is currently ~$1855/oz. A wee bit higher than it was in 2018. I'd like to see what the price of gold is compared with inflation over the last 2 years as well.
A whole lotta gold was taken out of the country... "During the financial crisis of 1933 that culminated in the banking holiday in March 1933, large quantities of gold flowed out from the Federal Reserve. Some of this outflow went to individuals and firms in the United States. This domestic drain occurred because individuals and firms preferred holding metallic gold to bank deposits or paper currency. Some of the gold flowed to foreign nations. This external drain occurred because foreign investors feared a devaluation of the dollar. Together, the internal and external drains consumed the Federal Reserve’s free gold. In March 1933, when the Federal Reserve Bank of New York could no longer honor its commitment to convert currency to gold, President Franklin Roosevelt declared a national banking holiday." https://www.federalreservehistory.o...ancial crisis of,out from the Federal Reserve.
Now it’s demand, worldwide, especially India and China, plus US. Not as easy to mine any metal as even a few years ago. Where is it less expensive to mine any metal? If it was easy, we’d have no conversation about it.More people, more demand. Think about that. Our national debt it straight up. Anybody see it going down? Gold vs US dollar, what’s your bet?
The reason gold rose and fell in REAL DOLLARS (inflation-adjusted) is because monetary policy was limited and the adjustment process for exogenous economic shocks (i.e., The Depression or Panics) was INTERNAL and fell on prices and wages. In layman's terms: when an economic disruption -- inflation or recession/depression -- happens, the economy is like the human body when encountering disease. It fights back by creating economic antibodies. These antibodies are falling wages and prices.....a falling currency..... inflation/deflation. If the currency/monetary policy is fixed (Gold Standard, Euro) then the adjustment process can not be through the money supply or currency....it must be accomplished by FALLING wages and prices. This is an INTERNAL adjustment made at the MICRO level. An EXTERNAL adjustment is inflation or a falling currency and is done at the MACRO level. But prices are sticky to the downside for wages and prices. Hence, additional pain and lost GDP output and why flexibile monetary and currency policies don't suffer Lost Decades like those tied to the Euro, Gold Standard, etc. Class Dismissed !
Nobel economist, Dr. Milton Friedman, made a number of PBS specials in the late '70s and early '80s that address many economic topics discussed today. Here's his take on the Great Depression and the economic policies that followed...
First OP, is that chart the US price for gold? You must remember the US artificially manipulated the price from 1933 to 1974. If its the US price the chart is valueless really for that time-frame. Gold usually spikes in response to fear or inflation. Its spiking now out of fear of Covid calamity, just like 2010 was fear based on a collapsing market. 1980 was due to inflation fears. Long term, ignoring Central Bank liquidations or purchases, gold should roughly mirror cost of energy to extract. Why was it cheap in the 1990's? Oil was cheap.
NICE, NICE, This was another awesome read, educational to me, You guys are so freaking smart on the subject. Thank u much.. signed for next class..
