In addition, the national debt had increased significantly as a result of the Vietnam War. As a result, the U.S. dollar weakened more and more during the 1970s. According to Macrotrends, it depreciated by about 20 percent between 1973 and 1979. This drove up the Gold Price Per Ounce and commodities in general. A series of negative events that combined in the 1970s to turn the investment world upside down and transform the mentality of investors in the coming decades.
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.
Gold is dispersed throughout the Earth's crust and, since ancient times, has been valued both for its scarcity and for its metallurgical properties. Before the 19th century, most nations maintained a bimetallic monetary system, which often included gold, but consisted mainly of silver. Starting in Britain in 1821, monetary units could be exchanged for a fixed amount of gold, a change that Britain expected would stabilize its rapidly growing economy. As the Industrial Revolution spread, other countries followed suit, and by the end of the 19th century, most industrialized nations were following the gold standard.
In the new global economy, the common standard facilitated international monetary transactions and stabilized exchange rates. However, the reign of the entire gold standard was short. In 1914, the restriction on gold exports at the outbreak of the First World War forced the use of inconvertible paper money. .
In 1930, the world economy collapsed and with it the gold standard. In response, most governments drastically limited the convertibility of paper money. In the United States, in 1933, President Franklin D. Roosevelt banned the circulation of gold coins, although gold was still used to define the value of the dollar.
In the United States and many other countries, currencies remained “linked to gold” until the 1970s, when the decline in global reserves marked the gold standard's last death sentence. In Hartford, Connecticut, representatives from Wethersfield, Windsor and Hartford adopt the first constitution of the American colonies, the “Fundamental Orders”. The Dutch discovered the Connecticut River in 1614, but English Puritans in Massachusetts mostly discovered the Connecticut River. read more Nobel Prize-winning theologian, musician, philosopher and physician Albert Schweitzer was born on January 14, 1875 in Upper Alsace, Germany (now Haut-Rhin, France).
The son and grandson of ministers, Schweitzer studied theology and philosophy at the universities of Strasbourg,. Read more On January 14, 1943, Franklin D. Roosevelt becomes the first president to travel on official business by plane. While crossing the Atlantic by air, Roosevelt flew in a Boeing 314 seaplane named Dixie Clipper to attend a World War II strategy meeting with Winston Churchill in.
read more On January 14, 1784, the Continental Congress ratified the Treaty of Paris, ending the War of Independence. In the document, which was known as the Second Treaty of Paris because the Treaty of Paris was also the name of the agreement that ended the Seven Years' War in 1763,. Read more. And they consider that “gold fanatics” — investors who believe that gold is the answer to all financial ills and is the key to surviving the impending financial apocalypse (in any era or decade) — are a bit far-fetched.
Negative interest rates silence a typical complaint about gold: that it doesn't pay interest or dividends. In the 1970s, the depreciation of the currency resulting from the abandonment of the gold standard was an important factor in inflation in the consumer price index. The current upturn in gold has some notable similarities with what happened with gold prices in the 1970s. We believe that the end of the gold standard was the main driver of gold's good performance in the 1970s, and that the benefits of gold to cover inflation in the 1970s were essentially coincidental.
This is where gold investors lose touch with economic reality and pursue ever higher prices in a feedback cycle of sky-high prices, “new-age thinking” and greed. Gold in exchange for foreign-held dollars, then, in 1974, it lifted its four-decade ban on the private purchase of gold. In the case of the gold standard, it was the lack of availability of gold to support convertibility. In the absence of a gold standard, adjustments in consumer prices and gold would probably have occurred over a longer period of time and, in a less disruptive way, the gold standard acted as a prey holding back natural economic forces.
Since many developed currencies were also de facto linked to gold because of their connection to the US dollar, it is not surprising that part of inflation seems to be totally unrelated to the price of the basket of currencies. .