What the '70s bull run can teach us about today's gold market

The last bull market in gold could be said to have begun on 15 August, 1971, when US President Richard Nixon 'shut the gold window'. He ended the direct convertibility of the US dollar to gold at $35 an ounce. In effect, he took the US – and the world – off the last vestiges of the gold standard. The bull market probably began earlier than that, however. Perhaps even before 1961, when buying pressure was such that the London Gold Pool was introduced to 'stabilise' the price of gold. However, any gains were not visible as the official gold price remained at $35 an ounce, even with all the dollar printing that was going on. The bull market ended on 21 January, 1980 – at 3pm, if you were in Britain, with the London PM gold fix. Gold spiked to $850, at a time when US interest rates were as high as 20%. Today I want to draw a couple of comparisons between the current bull market and that of the 1970s, to see what we can learn.