One of the most famous events in the gold market was its run to $850/oz back in 1980.
Almost three decades later, gold finally made a new all time high, but it was an all-time high in nominal terms. Adjusted for inflation, we’re still nowhere close to what we saw in 1980.That being said, it’s important to keep in mind that the 1980 peak was a speculative bubble and comparing today’s price, in either real or nominal terms, to that speculative peak is nearly worthless.
It’s like saying that home prices can go up another 100% from here because that’s where prices were in 2005. Or like arguing that JDS Uniphase stock could go back to $1,000 per share because that’s where it was trading during the heights of the dot-com bubble. We might still be a long way from the real highs in the gold market, but there are much better theses on which to base a bullish case for gold.
Keep your eye on both the investing public for hints at speculative demand and the Federal Reserve for guidance on monetary policy. If investors around the world do start really speculating on gold, you can see from that chart how high it might go. There have been an awful lot of great bull markets in history that have ended in speculative frenzies. But should the Fed start taking some of these dollars out of the system and tightening up monetary policy to bolster the strength of the dollar, it would very likely be very bad for gold.
Almost three decades later, gold finally made a new all time high, but it was an all-time high in nominal terms. Adjusted for inflation, we’re still nowhere close to what we saw in 1980.That being said, it’s important to keep in mind that the 1980 peak was a speculative bubble and comparing today’s price, in either real or nominal terms, to that speculative peak is nearly worthless.
It’s like saying that home prices can go up another 100% from here because that’s where prices were in 2005. Or like arguing that JDS Uniphase stock could go back to $1,000 per share because that’s where it was trading during the heights of the dot-com bubble. We might still be a long way from the real highs in the gold market, but there are much better theses on which to base a bullish case for gold.
Keep your eye on both the investing public for hints at speculative demand and the Federal Reserve for guidance on monetary policy. If investors around the world do start really speculating on gold, you can see from that chart how high it might go. There have been an awful lot of great bull markets in history that have ended in speculative frenzies. But should the Fed start taking some of these dollars out of the system and tightening up monetary policy to bolster the strength of the dollar, it would very likely be very bad for gold.
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