History Of Gold Prices
History of Gold Prices
What to Know Before Investing
As far as the investment sphere is concerned, gold is one of the best vehicles because it does not carry much risk and provides guaranteed returns. Although gold may be an important article of trade, it does not operate and behave in the same manner as other trade commodities. Most people simply turn up with large amounts of cash in order to purchase gold whenever they like but this isn’t the right way to invest in gold. One must study the gold prices and the trends associated with these prices in the history of gold prices in order to find out the best time to invest in this precious metal.
In the past, gold was used as a means to value the US dollar, hence the term “gold standard”. This practice came to an end during the 1970’s because the value of the United States Dollar (USD) was plummeting while the prices of gold started soaring high. President Nixon terminated the convertibility of USD to gold in the year 1971, thus putting an end to the pivotal role played by gold in the world currency systems. After three years, ownership of gold by the US citizens was legalized.
In the year 1973 the price of gold was close to USD 42 per ounce. This marked the period from which the price of gold started soaring up in a significant manner. During the month of June in the same year, the price of gold had climbed up to USD 120. Seeing the massive climb in the price of gold, other major countries too followed the footsteps of USA, i.e. by lifting the restrictions associated with owning gold. Two years later, in 1975, the trading of gold futures on COMEX began and the free market too included gold as one of its trading commodity. Due to these new developments, the demand for gold increased, which made its price sky-rocket to USD 180.
However, the price of gold did not always soar when one glances back into the history of gold prices. During the late 1970s, the price of gold experienced wild fluctuations. The highest upswing was USD 240 before it fell down to USD 200 again. In the year 1979, the performance of the stock market was not very impressive, which is why another climb in the price of gold occurred. The international tensions pertaining to Iran and the uncertainties in oil production also influenced the price of gold greatly. In fact, the price soared as high as $420 an ounce. Of course, the price crashed soon after that.
From the gold price history, one can draw a conclusion that the price of gold has the potential to blow up during times of international crisis, inflation, uncertainty of stock market and so on. However, there are factors that affect the price of gold and bring it down too. Nevertheless, when there is a lack of real value in case of the stock market and when there is uncertainty in the world, the price of gold will be poised for a steady rise once again!