What's Up With Gold?

31 Dec 2024 by rate3

In the 20th and 21st centuries, gold prices experienced significant fluctuations. In 1914, the increase was +11.1%. This continued in 1915 with a +24.4% rise and +25.7% in 1916. However, following the end of WW1 major hostilities, there was a sharp decline in 1917, with prices dropping by -15.5%, and further decreasing by -23.5% in 1918.

The Roaring Twenties saw a resurgence in gold prices, with increases of +27.1% in 1919, +68.3% in 1920, +24.8% in 1921, and +33.9% in 1922. This was followed by sharp drops during the Great Recession, with declines of -11.3% in 1923 and -17.6% in 1924.

From 1934 until 1971, the official gold price was fixed at $35 per ounce due to the Gold Reserve Act. However, the 1970s brought an inflationary spike, starting with an increase of +38.6% in 1971, and culminating in an extraordinary rise of +144% in 1980.

Beginning with the historical Fed easing program in 2000, gold prices skyrocketed from approximately $500 in 2000 to around $1,800 by 2011. In 2008, there was a notable increase of +25.3%, heavily impacted by the financial crisis. In 2011, gold prices rose by +10.1%, influenced by the European sovereign debt crisis.

From 2012 to 2014, prices reversed due to the end of the Fed's quantitative easing program. However, gold prices started to rise again after geopolitical tensions and governments' bureaucratic mismanagement escalated from 2018 to 2024.

Notably, a 27% price spike in 2024 is concerning, as it mirrors trends from the pre-war period of the 1910s and the overheating of the 1920s, which were followed by some of the greatest calamities of the 20th century.