jmherbenerFed monetary inflation in the late 1970s created a bubble in gold late in 1979 and into 1980. When Paul Volker at the Fed slowed monetary inflation to break the double-digit price inflation, the bubble popped.
http://www.kitco.com/charts/historicalgold.html
(You must construct the chart by selecting the relevant years.)
Only time will tell if the run up in gold from 2000 to 2013 will prove to be a bubble.
http://www.kitco.com/charts/historicalgold.html
(You must construct the chart by selecting the relevant years.)
What moderated the price of gold in the 1980s and 1990s was an increase in world demand to hold dollars, which moderated price inflation. Price inflation has remained moderate through the 2000-2013 period and the run up in gold has occurred during a bust instead of before the bust as in the 1980s. What’s the same for the two periods is the expansionary monetary policy of the Fed. We’ll see soon enough if investors have over- or under-estimated the effect of such policy on the purchasing power of the dollar and the price of gold.