Gold and Silver is Dead – Long live Gold

If you were to follow the investment patterns and economic analysis of precious metals like gold and silver, you will realize that on more than one occasion someone predicted gloom and doom for the price of gold and silver. They declared these two metals to be dead in 1976 but they didn’t. Those who have had the most success with gold have held fast, adopting a never-say-die attitude and often called kooks. The truth is, these big dreamers and “kooks” are often right.

The price of gold was locked and spiraling down from 1975 before hitting rock bottom in 1976. This was the start of the greatest bull-run fold in history. It culminated in gold peaking at $594.90 after a steady 20-month decline. Whenever it looked like the price of gold would stabilize between 1975 and 1980, this did not happen. In fact, gold fell by an incredible 47% between 30 December 1974 and 25 August 1976.

There were a lot of things happening around then. Unfortunately, most people did not know what was driving the price and couldn’t understand why events that should have served as catalysts driving the price of gold high weren’t doing just that. There was a general sentiment that was negative towards gold which led a lot of people to think that investing in this precious metal was not worth it.

Here are some of the things pundits had to say about gold back in on March 26 1976: the New York Times reported that the party for gold seems to be over. Parties are supposed to end or wind down. That article also led to other analysts urging investors elsewhere instead of gold. Those who were holding on to gold were being made fun of and using the term “Gold Bugs” in a pejorative manner. Dealers were saying the market was not a buyer’s market but that turned to be untrue. It turns out the “gold bugs” weren’t that wrong after all. These are people who considered the fundamentals when buying gold and did not follow the so-called wise investment “Gurus”. Those that did listen to the wisdom of the day likely missed out on what could have been the best investment of their lifetime.  

Two decades later, everyone realized how wrong they were and how right the kooky gold bugs were when they were buying or investing their money more into gold than other classes. There is something that we can learn from this look back at one of the most volatile times in gold: the decision to buy or sell is driven by fundamentals like Inflation, economic instability, weak currencies, etc. Buy gold to protect yourself but make sure that when you buy gold, you plan to hold on to it for a while and not be swayed by all these “pundits”. Yes, understanding the markets is important but the gold market or precious metal is different – make sure you understand what is going on, how it affects the gold price, and what is potentially in the future. Buy gold and hold on to it and make sure you are prepared for the precious metal’s next best run. Patience worked for those investors who bought and held on to their gold back then saw that patience pay-off.