Gold Price in the 1970s

The decade began with gold still pinned to the US government's $35 parity: the London market averaged just $36 in 1970 under the two-tier system introduced in 1968. Everything changed on August 15, 1971, when President Nixon ended the dollar's convertibility into gold and the metal began trading freely. The response was immediate: annual averages ran from $41 in 1971 to $97 in 1973 as the Bretton Woods system collapsed and the first oil crisis hit, then $159 in 1974, the year Washington re-legalized private gold ownership for Americans.

The bull market paused mid-decade. IMF gold auctions and a cooling of inflation knocked the average down 22 percent to $125 in 1976, the decade's only meaningful setback. The final act was explosive: the second oil crisis and the Iranian revolution drove averages to $193 in 1978 and $307 in 1979, and after the Soviet invasion of Afghanistan in December 1979 the spike carried straight into the famous $850 peak of January 21, 1980, just past the decade's end.

Three forces compounded. First, inflation: the US consumer price index rose about 87 percent across the decade, and for long stretches interest rates sat below inflation, so cash lost purchasing power while gold preserved it. Second, the dollar itself was being repriced, through the 1971 Nixon Shock and the devaluations that followed, and gold was the most direct hedge against a currency losing its anchor. Third, geopolitics kept adding risk premium: the 1973 oil embargo, the 1978 to 1979 Iranian revolution, and the Soviet invasion of Afghanistan.

The 1970s also established the template investors still use: gold as the asset that performs when real interest rates are negative and confidence in paper money is falling. For what those 1970s prices are worth in today's money, see the gold price adjusted for inflation table.