Gold Hits New High at Opening! Looking Back at History 45 Years Ago, Can This Bull Market Get "Crazier"?

On Monday's opening, international gold prices unsurprisingly hit a new historical high...

Market data shows that spot gold prices had already risen above $3,380 during the early Asian session on Monday, while New York futures gold even touched a high of $3,395, just a step away from the $3,400 mark.

It can be said that many precious metal investors have become somewhat "numb" to the continuous new highs in gold prices recently. From around $2,000 at the beginning of last year to now approaching the $3,400 milestone, almost all market participants have been amazed by the strong upward momentum of gold prices.

However, if someone tells you that the speed of this gold bull market may not yet be "historic," what would you think?

Macro strategist Simon White revisited a 45-year-old experience over the weekend and compared it to the current gold market situation.

White stated that compared to the late 1970s, the recent rise in gold still pales in comparison—since the beginning of 2024, gold prices have increased by over 60%. In the bull market 45 years ago, gold tripled or quadrupled in just one year.

White pointed out that the gold bull market at that time was driven by multiple factors: The US experienced a decade of severe inflation, and the US Fed began to lose market trust. Most critically, the US terminated the convertibility between the US dollar and gold in the early 1970s.

On August 15, 1971, Nixon announced the implementation of the "New Economic Policy," ceasing the exchange of non-reserve currency dollars at $35 per ounce, along with other economic policy adjustments, which triggered the collapse of the Bretton Woods system. Investors' confidence in paper currency collapsed, and the demand for gold as an inflation-resistant "hard currency" surged.

White believes these factors remain relevant today:

US inflation persists stubbornly (though not as high as in the late 1970s), and while the US Fed has not repeated the credibility crisis of the Paul Volcker era, its independence is increasingly being severely eroded and may be further damaged in the future.

Last week, US President Trump had already fiercely criticized Fed Chairman Powell three times on social media, with unprecedented severity in his language.

White stated that although there has been no move like Nixon's closing of the gold exchange window, Trump has essentially altered the convertibility of the US dollar as a "stable asset free from political intervention."

White cited that over the past three years, global US dollar-denominated reserve assets have decreased by $450 billion, while gold reserve assets have increased by over $700 billion.

White noted that although the current rise in gold may not match that of 1979/80, it clearly reminds the world—bubbles can even surpass the most wildly optimistic expectations.

This may also be why many Wall Street investment banks have been continuously raising their gold price forecasts recently, even looking towards $4,000 or higher...