There is a pattern to gold bull markets
Gold bull markets tend to go in a certain way.
Gold markets that are bullish tend to behave in a predictable manner.
Instead of spreading fear to get people to invest in precious metals, you can just look at how gold has responded to different economic situations in the past to see what makes it go up.
From what I can tell, a gold bull market has three stages:
Currency devaluation
Then there was the "mania" phase.
You can't plan for the manic phase, of course. But you should still be ready for it.
Think for a moment about the "Nixon Shock" of August 15, 1971, as a classic example of a drop in the value of a currency. On that day, US President Richard Nixon ended the fixed rate of $35 per ounce for turning gold into US dollars.
In the end, Nixon broke the international agreement that had been made at Bretton Woods in 1944. This agreement had made it possible for gold to back the world's reserve currency.
Nixon said that he was making this move to "defend the dollar." It had the opposite effect, and the value of the US dollar fell while the value of gold went up...
Early gold investors noticed this sudden drop in the value of their local currency and worked to change the laws in the United States about who could own gold privately.
In the first year after this decoupling, the price of gold went up by 100%.
By the end of 1974, gold was 431 percent higher than when the link between gold and the dollar was broken...
In 1974, when a gold futures contract was made, the market was able to move forward even more. When Wall Street finds a way to bet on something, investors usually rush into the market...
... which they did. This was the phase of investors.
As central banks started to raise interest rates and sell off gold, the price of gold stayed about the same until 1978.
At that time, the price of gold shot up because investors were looking for a safe place to put their money because of high inflation, slow economies, energy supply shocks, and inconsistent central bank policies.
...and everyone went crazy.
History doesn't repeat itself, but it rhymes.
Of course, everyone thought this would be a one-time thing.
But when the 2000s came around, a similar pattern started to show up.
At the start of the new millennium, the US government owed trillions of dollars. Which wasn't a problem, of course, until market shocks like the bursting of the bubble in technology, media, and telecommunications (TMT) stocks and the events of 11 September 2001 caused the Federal Reserve (a.k.a. the Fed, the US central bank) to panic and cut the federal funds target (also called the policy rate) to 1 percent by the middle of the first decade of the new millennium.
This shook people's faith in the US dollar around the world, and it started to lose value again.
Wall Street did it again, and with the introduction of gold exchange-traded funds (ETFs) in 2003, the average investor could trade gold like shares on the stock exchange.
Accessibility led to a lot of small investors buying precious metals. For example, gold-backed ETFs bought a lot of physical gold, which drove up the price. The time for making investments had begun.
But something called the "Global Financial Crisis" in 2007 was the thing that made gold's price go up so much. This made the price of the yellow metal almost triple in the next three years...
...as the craze took over.
It starts with a weak currency.
Of course, this is a short version of the gold bull markets in the 1970s and 2000s.
We don't have enough room at Exponential Investor to tell the stories the way they deserve to be told.
The pattern is what's important. The bull markets began when the value of the currency went down...
...after which investors became interested...
... and finally finished a craze.
You don't need to be scared or worried to want to invest in gold.
You just need to know what makes the price of gold go up and down to see where it could go in the future.