1

Explaining the 1980 – 2001

Bear Market

Gold Rate

1. BACKGROUND

2

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

$-

$200

$400

$600

$800

US$ Per Ounce of GoldLondon PM Fixed Averages 1980 -

2001

1. If an investor had bought gold in January 1980 for a rate of US$ 677 per ounce, he could have sold off his bullions a decade later for only US$ 409

2. This constitutes a decrease of 60%, not considering inflation!

3. A decade later, in December 2000 gold stood at only US$ 283

1. BACKGROUND

3

1. What explains the gold bear market from 1980 until 2001?

2. These two decades experienced first an end of the economic stagflation of the 1970s, with a stabilized economy and controlled inflation.

3. In the 1990s Bill Clinton oversaw a long economic recovery, named New Economy

1. BACKGROUND

4

1. Interestingly, the fall of the Soviet Union which brought down communism in most countries, and ended a bi-polar world order after 45 years, had no immediate impact on the development of the gold price

1. BACKGROUND

5

2. BACKGROUND

6

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

$-

$200

$400

$600

$800

US$ Per Ounce of GoldLondon PM Fixed Averages 1980 -

2001

1. 1982: New gold deposits discovered in North America and Australia

2. 1982: Private possession of gold allowed in the PR China. But only 6 years later it became feasible for private citizens to buy gold

3. 1993: Germany lifts VAT requirements on financial gold

2. TIMELINE

7

1. 1993: India and Turkey liberalize gold market

2. 3. August 1994: Merger of the Commodity Exchange (COMEX) and the New York Mercantile Exchange (NYMEX) under the NYMEX name. This is to become the world’s largest commodity futures exchange, located in Manhattan, New York. The COMEX division trades in gold and other metals

2. TIMELINE

8

1. 1994: Russia formally established a domestic gold market

2. 1997: US Taxpayers Relief Act, allowing individual retirement account holders to buy gold bullion coins and bars for their accounts, if the gold has a fineness of at least 99.5%

3. 20. August 1999: Gold was traded in London for as low as US$ 252.80

2. TIMELINE

9

1. 26. September 1999: To regulate gold selling & its price, 15 European Central banks signed the Central Bank Gold Agreement (CBGA).

2. CBGA set the annual limit of gold sales to 400 tons, or 2000 for the whole 5-year period of the agreement

3. CBGA was superseded CBGA II and III

2. TIMELINE

10

2. TIMELINE

11

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

$-

$200

$400

$600

$800

US$ Per Ounce of GoldLondon PM Fixed Averages 1980 -

2001

12

Visit my blog about the Gold Rate & Charts, Gold History,

Taxes and Trading Advice

www.goldratefortoday.org

INTERESTED IN MORE?