In this segment we will outline the gold bear market. We will analyze this by considering some historical facts and figures, helping us to understand the emergence of bear market for gold in US. During the 1970s, precious metals like gold coins were introduced as an investment vehicle in US.
This period was very important in the history of global economics because in that very decade, the rest of the world first raised a question regarding the long-term stability of the US dollar value. However, the gold bear market was anticipated after 1975.
Before 1975, the price of the gold bars and coins were high due to high inflation fears and anticipated price hike for gold. In 1975 the ownership of gold was made legal. In that same year, many US citizens did loose their interests in gold, sold at 130 dollars per ounce, due to the ongoing recession. It was widely thought at that time that gold had no place in modern economics and finance.
Surprisingly, in 1980, the price of gold increased a lot, sold at 800 dollars per ounce. Therefore, the experts had to take back their own words and everybody admitted that the paper money system had some fallacies. The energy prices were rising rapidly due to high inflation, and naturally people became frightened.
During the early 1980s, the gold prices again went down and everybody expected a gold bear market. The price of gold ranged between 300 to 450 dollars per ounce.
During the late 1980s, gold was relatively steady, for the Wall Street Banks were actively buying gold. After 1989, the price increased again by almost 40%. Therefore, the public started buying common issues, and as a result, the DOW and NASDAQ indexes increased rapidly, which, in turn, again slowed the gold market down. So, another buying opportunity opened to the gold buyers.
During the early and mid nineties gold prices fluctuated every now and then. In 1999, it went down at 252 dollars per ounce. Therefore, again a bear market for gold occurred and many “gold bugs” seemed to be suspicious. Thus, according to many experts, gold should be thought of as a “buy of a lifetime”.