Understanding Historical Gold Prices is the First Step to Becoming a Gold Investment Expert
Historical gold prices are just statistics snapshots relating only to the conditions under which they were taken. Like all statistics, they can be manipulated to prove just about any theory both the bulls and bears might devise. But when viewed dispassionately, and with common sense, they are the foundation for a deep understanding of the fundamentals driving past and present gold price trends.
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Think of it as a Puzzle
Studying historical gold prices should be fun, not a tedious analysis of heaps of dry data. Be a detective looking for clues. Here are a few hints:
- Go back no further than 1972. Gold prices from the era of the gold standard have absolutely no bearing on those under the current fiat money system.
- Relate the raw data to a meaningful standard. Most inflation adjusted data took a sharp departure from reality in the 1980s, when the government began fudging the figures to fuel the credit bubble. It makes a lot more sense to think in terms of purchasing power even your own unscientific gut feel.
- Ignore the flukes. Of those, the bubble of 1980 is the bears favorite for proving their point. But flukes are just red herrings.
- Put the data into a realistic context. Like saving, gold investing is an ongoing process, not an event. Think in terms of periodic purchases over an extended period of time, not the returns for any single year.
- Pay special attention to trend shifts. Most economic shocks are transitory, short-term interruptions in the price of gold before they return to the trend. When there is a significant alteration of the gold price trend, look for permanent underlying shifts in socio-economic conditions.
Practice Thinking for Yourself
When you are just starting to look at historical gold prices, it pays to get a little guidance from the experts. Gold Price has assembled a professional staff of gold specialists to answer your questions and has compiled a variety of free literature that’s yours for the asking. But your goal should be to form your own ideas and opinions, because that is how you build confidence and intuition. Before you know it, you will have acquired a sound understanding of historic gold prices, and you will be well on your way to becoming your own gold expert. Learn more about Gold Prices. Next: Gold Spot Prices