A series of negative events that combined in the 1970s to turn the investment world upside down and transform the mentality of investors, including a sharp rise in the Gold Price Per Gram. An unpopular war in a distant country turned into a costly political disaster. The president's approval ratings fell below 30%. The president and vice president were forced to abandon their posts. Americans watched helplessly as Muslim fundamentalists in Iran were holding our hostages in the United States.
However, when optimism turns to extreme pessimism, fear of loss quickly takes hold. As the race to avoid losses progresses, investors go on the defensive and buy gold and silver to protect themselves against a crisis, high inflation, a fall in the dollar or a stock market crash. In the 1970s, investors turned to gold and silver to protect themselves and earn better returns. While they were doing so, gold rose 2,300% and silver rose 2,400%.
In today's hostile investment environment in stocks and bonds, gold prices have risen 224% from low to recent high. Similarly, silver has risen 268% from lowest to highest. However, we believe that these initial gains predict the arrival of a megatrend. There is still no total rush for precious metals.
But when it comes, gains of 2,300% for gold become a real possibility. To understand why gold and silver are having such success year after year, let's review how we got here. In the mid-1990s, millions of baby boomers began planning for their retirement. The majority moved their CDs to the stock market.
The first boomers were 10 to 15 years away from retiring. They could afford the risk of stocks in exchange for better returns than CDs or bonds. As a result, an unprecedented influx of trillions of dollars moved to the U.S. UU.
As a result, almost anyone could choose stocks that would generate annual profits of 10 to 20%. As always, money attracts money until a huge stock market bubble inflates. Many people borrowed money with second mortgages to buy dot com stocks. Others borrowed with their credit cards to buy stocks.
Millions of people place their total trust in Internet technology and actions to become rich. Millions of people kept their life savings in stocks, believing that stocks were infallible and a “loss-free” investment. They were proven completely wrong when the stock market bubble burst. Unfortunately, billions of paper dollars have disappeared from retirement accounts since the 2000 crisis.
We know countless people who were forced to leave their retirement and return to work because they failed to adequately balance or diversify their portfolios with a basic share of gold and silver. Many are still losing money on stocks today and can't understand why. Unfortunately, people who don't know history are often doomed to fail. In fact, this wasn't the first boom, bubble and bust of technology-inspired stocks.
It happened to railroads in the 1840s and to radio in the 1920s. You may remember that the burgeoning stock bubble of the 1920s ended in an economic bankruptcy that we call The Great Depression. We can't imagine why anyone would doubt the beneficial power of precious metals, unless they don't know the facts. In our opinion, many of the factors that drove gold and silver in the 1970s have returned.
Nowadays, we live in a climate of high oil prices, energy-driven inflation, falling stocks, rising interest rates, a war in Iraq, plus Iran and North Korea as nuclear threats. We believe that stocks, bonds and real estate are in the riskiest position we have seen since the 1970s. There is no way to know what exactly could trigger the next financial crisis: a terrorist attack against the United States, a nuclear event, Iraq, Iran or North Korea. In today's geopolitical environment, isn't it surprising that gold has risen 224% in recent years? The implications of history repeating itself, but this time it will be much worse, are quite obvious to us.
The following Goldmoney chart shows the annual percentage increase in gold since 2001 in the nine major world currencies. Interactive chart with historical data on the real (inflation-adjusted) prices of gold per ounce up to 1915. The series is deflated using the main consumer price index (CPI) with the most recent month as the base. If I am right, gold's upward movements will become less paused and will increasingly resemble the violent rises of the 70s. If you don't have gold yet, I advise you to get something before those most volatile peaks begin to materialize.
As a result of its decisive actions, inflation declined, while gold peaked and entered a bear market. A bear market refers to a decline in prices, usually over an extended period, of a single security or asset, group of securities or of the stock market as a whole. It may surprise you to learn that the main investment in the 1970s was not stocks, bonds, real estate or traditional investments, but that it was gold that soared 2300%. The point is that inflation impoverishes us all, but in such an environment, gold attracts additional interest and can more than keep up with the pace of inflation.
Perhaps even before 1961, when buying pressure was such that the London Gold Pool was introduced to “stabilize” the price of gold. If inflation rises to 4% — or even 6% — in the coming years, gold could rise by hundreds of percent. The quantity of money is probably the most important concept in economic theory, since it affects the price level. The strongest currency has been the Australian dollar, against which gold has achieved average annual gains of 11.7%.
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