The Modern Gold Rush
There was a stampede into gold in the late 20th century, and another gold rush may be imminent.
The Great Gold Rush
Between 1965 and 1974, gold rose from $35 per ounce to $850, a 24 times increase, and absolutely mind-blowing for an ultra safe and "stable" commodity. Once it passed $100, and as it progressed upwards, the media jumped in, and helped create a classic bubble. The first item on the TV news each night was often "Gold hits new high" or similar. Over 4 million krugerrands were minted in 1974 alone.
The Bubble Bursts
The 1970's gold rush turned into a "bubble" in its last few months.
This gave the more negative elements of the world's media something to say along the line of "Gold Loses Its Shine", between 1974 and 1999, and some of them were still saying it even during the first few years of the third millennium. These were probably the same hacks that were mindlessly reporting "Gold Hits New High" during 1974. It is possible that media hype is an essential part in any financial bubble, or other hysterical fashion craze.
Even is we looked at gold's price performance from 1964 to 1999, at its bottom, it was still a great investment between these two dates. At its lowest dollar price on the afternoon fix of 20th July 1999, gold fixed at $252.80; this represented a rise of over 7 times from its base to its lowest point in recent years. Again, not bad for a safe defensive asset!
Traditional Gold Rushes
Writing this page after closing on the eve of a holiday, perhaps we can be forgiven for borrowing the following from Wikipedia:
A gold rush is a period of feverish migration of workers into the area of a dramatic discovery of commercial quantities of gold. Several gold rushes took place throughout the 19th century in Argentina, Australia, Brazil, Canada, Chile, New Zealand, South Africa, and the United States. Gold rushes helped spur permanent non-indigenous settlement of new regions and define a significant part of the culture of the North American and Australian frontiers. As well, at a time when money was based on gold, the newly-mined gold provided economic stimulus far beyond the gold fields.
The first significant gold rush in the United States was the Georgia Gold Rush in the southern Appalachians, which started in 1829. It was followed by the California Gold Rush of 1848-49 in the Sierra Nevada, which captured the popular imagination. The California gold rush led directly to the settlement of California by Americans and the rather rapid entry of that state in the union in 1850. Successive gold rushes occurred in western North America, gradually moving north: the Fraser Canyon, the Cariboo district and other parts of British Columbia, and the Rocky Mountains. One of the last "great gold rushes" was the Klondike Gold Rush in Canada's Yukon Territory (1898-99), immortalized in the novels of Jack London, the poetry of Robert W. Service and films such as Charlie Chaplin's The Gold Rush.
The Victorian gold rush, which occurred in Australia in 1851 soon after the California gold rush, was the most major of several Australian gold rushes. That gold rush was highly significant to Australia's, and especially Victoria's and Melbourne's, political and economic development. With the Australian gold rushes came the construction of the first railways and telegraph lines, multiculturalism and racism, the Eureka Stockade and the end of penal transportation. Many of those involved in mining in Victoria later traveled across the Tasman Sea to take part in the Central Otago Gold Rush, New Zealand's biggest gold rush. This kick-started New Zealand's economy and made the city of Dunedin a major financial center in the young colony. In South Africa, the Witwatersrand Gold Rush in the Transvaal was equally important to that country's history, leading to the founding of Johannesburg and tensions between the Boers and British settlers.
Gold rushes were typically marked by a general buoyant feeling of a "free for all" in income mobility, in which any single individual might become abundantly wealthy almost instantly. The significance of gold rushes in history has given a longer life to the term, and it is now applied generally to capitalism to denote any economic activity in the participants aspire to race each other in common pursuit of a new and apparently highly lucrative market, often precipitated by an advance in technology.
The Next Gold Rush
It would probably be foolish of us to try to predict whether there will ever be another great gold buying rush like that of the 1970's, although it actually feels as if one might develop any day now, September 2007, with the US Sub Prime Lending crisis affecting stock markets everywhere.
We believed this shake-up was coming, having read the book "Wake Up" by Mellon and Chalabi, in fact it is somewhat bemusing to read each days financial news headlines with a yawn, and thinking "what do they expect", have these people never read the book?
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