Gold in August this year reached another all-time high, breaking the previous maximum reached in August 2011. Since the beginning of the year, amid the recession, Covid and quantitative easing by central banks, gold has grown by 23%, and the growth of the exchange-traded fund for the shares of gold mining companies VanEck Vectors Gold Miners ETF (NYSE: GDX) has exceeded the growth of gold prices by 2 times and amounted to 47% ...
In this connection, questions arise: to buy or not to buy gold now, or maybe - shares of gold mining companies, or is it still preparing for a sale?
There was a standard
To answer the questions, consider the dynamics of prices and the events that influenced the change in prices for the yellow metal for the period from 1914 to the present.
Retrospectives of events related to gold are not as complex as it might seem when looking at the chart. The main events that influenced the pricing of gold are the following:
1. The stock market crash of 1929, the Great Depression and nationalization
After the stock market crash of 1929, which was followed by the Great Depression, the US government nationalized gold reserves in order to combat the depression in the economy.
On April 5, 1933, by decree of US President Roosevelt (Executive Order 6102), US residents were prohibited from owning gold (bars, coins, certificates) under the threat of a financial fine and criminal punishment, and the available gold must be sold to the Federal Reserve (central bank of the United States) directly or through commercial banks at the current price of $ 20.67 per ounce at that time.
On January 30, 1934, the Gold Reserve Act of 1934, the gold held in the Fed was transferred to the US Treasury and the government became the sole owner of the gold reserves. After that, the dollar was devalued from $ 20.67 to $ 35 per ounce.
Until 1933, the gold standard was in force, according to which the national currencies of countries were secured and exchanged for a certain amount of gold, an ounce of gold during this period was worth about $ 19.