That's incorrect. The bull market in gold began in the 60's and was a direct precursor to the Nixon shock. Overseas redemptions of U.S. gold were accelerating due to the fiscal decisions made in the 60s. Overseas investors (especially governments) could redeem dollars, accept gold and sell on the international market at a premium to the officially recognized value of $35/oz.Slotine wrote:
No. Excluding 1980 there was no bull market in gold.
Nixon had to close the window or the U.S. would have been drained of all its reserves. As the reserve currency, the U.S. enjoyed the largest stock of gold post WWII at over 20,000 tons. By 1970, redemptions had reduced that amount by 12,000 tons.Slotine wrote:
That aside, the ups and downs in the 70s are merely a reaction to the inflation expectations that was coming and going. Inflation was already on an uptrend curve before the end of Bretton Woods. Dropping the peg merely shifted the responsibility of dealing with it to the private sector. If inflation had been dropping, as it did mid 70s, you would see the free floating gold price drop, as it did. So attributing the start of a free floating dollar to rising gold prices is a mistaken bias. If you we're truly objective on gold and the government, Nixon didn't make a difference.
When the dollar was no longer redeemable in gold, the price continued to elevate until real rates moved positive as MG mentioned above (75/76). Upon resumption of a negative real rate environment, gold continued its upward acceleration until its market became so popular that even the shoe shine boy owned it by late 1979.
The gold bull market lasted about 15 years and had several corrections along the way, as most bull markets usually do. It wasn't until Volker moved rates well ahead of inflation that the gold bull was finally derailed.
The Hunt Brothers were major players in the silver market throughout the 70s, but to say they drove the gold market is not accurate.