The History of gold and glossary

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The History of Gold prices from 1929-2009

1929-1931 Gold prices in the U.S. Remained constant up to and through the Great Depression averaging $20.50 from 1925-1930.

1933 The ownership of gold by private US citizens was no longer legal due to the Confiscation Act. For the next 38 years the average gold price was $34.50

1934 On January 1, 1934 President Roosevelt established the value of the U.S. Dollar at $35.00 a troy ounce for fine Gold .9999 . This action devalued the dollar by 41% and the US Treasury became the sole owner of all the nations gold.

1944 The Bretton Woods agreement signed in July1944 made the U.S. Dollar the world's Reserve Currency and adopted the $35 per ounce per troy oz gold value.

1947 The IMF and World Bank were established and the U.S. Treasury held to the $35 benchmark.

1961 The London Gold Pool established between the U.S. and eight European nations to prevent the private market from exceeding the US 35 per oz price set in 1934.

1968 The French President Charles de Gaulle insisting on the redemption of U.S. Trade dollars in gold instead of US Treasury debt paper (legally permitted under the Bretton Woods Agreement of 1944) caused the closure of the London Gold Pool in 1968.

1971 President Nixon faced with eliminating mounting trade deficits or revaluing the dollar downwards against gold ended the the gold window in August 1971. President Nixon refused to accept the international obligation of the U.S. to redeem its Dollar in Gold.

1973 World currencies were “floated” against each other in a basket that was no longer backed by gold.

1974 Gold price soared from $35 to U.S. $195 per troy oz.

In January 1975 it became legal for U.S. citizens to own public gold.

1976 Central Banks sold massive quantities of gold bullion at auction in an attempt to devalue the metal.

1978 U.S. Dollar looses a full 25% of its weighted value against a basket of other world currencies as the demand for gold continued, resulted in the Treasury/IMF ending gold auctions.

1979/1980 Determining that the global financial system was on the verge of collapse, the newly appointed Federal Reserve Chairman Paul Volker, dramatically changed fiscal policy from controlling interest rates to controlling money supply. This resulted in gold trading at $400 in October 1979 and then $850 on January 21, 1980.

1981 U.S. Prime Lending Rate hit 20%, as investors retreated back into dollar investments and as a result gold prices retreated to the $460 level.

1983/1989 The Dow Jones Industrial Average broke through 1100 points signaling a bull market for stocks and a long bear market for gold.

1989/2000 With world events such as Desert Storm, the collapse of the Soviet Union, large selling of gold by central banks and the Dot Com Crash kept gold prices relatively calm.

2001/2003 With the 9/11 and the War on Terror, Gold once again was beginning to rise as the Dollar lost value against the newly introduced Euro which led gold to climb back to $406 in December 2005.

Several natural disasters caused an economic setback in the U.S. Crude oils supplies were threatened as war in the Middle East continued, with the result that gold traded above $500 in December 2005.

2006/2007 As the national debt in the U.S. Reaches $U.S. 10 trillion and the dependency on foreign crude oil exceed $U.S. 3 trillion, Gold rallies to $750 in late 2007. Economic forecasters and analysts indicated that this was just the beginning and that gold prices had the potential to double/triple over the nest few years.

2008 Gold prices soar over $1000 per oz. In March 2008 while the DJIA plummets 42%. Gold again is the beacon of stability, safety and security in times of financial crisis.

2009 With historically low interest rated worldwide, 10% unemployment in the U.S. and exploding international government debt, gold rallied to $1,226 in November 2009.

Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Actuals
Physical commodities as opposed to futures contracts or the commodity that underlies a futures contract.

Ag
The chemical symbol for silver.

Alloy
A substance composed of two or more metals.

Allocated Metal
Assigning defined quantities of physical metals to specific accounts. For example, if an investor buys shares in a gold exchange-traded fund, each share is backed by a defined amount of physical gold.

Ask
The price which the seller is willing to accept for a commodity; also known as the offer price.

Assay
The act of testing the purity of precious metals.

Au
The chemical symbol for gold.

Backwardation
The theory that posits that as a futures contract approaches expiration, its price tends to rise; also known as an inverted market.

Bank Wire
An electronic transfer of funds through the Federal Reserve System from one financial institution to another for the benefit of a specific account.

Base Metal
Copper, aluminum, iron, lead, nickel, tin and zinc.

Basis
The variation between the spot price of a deliverable and the relative price of the futures for the same actual that has the shortest duration until maturity.

Bear Market
Market characterized by a declining trend in terms of prices.

Bid
The bid price is the price at which a dealer is willing to buy a commodity; opposite of "ask".

Bullion
Precious metals, including gold, silver, platinum, and palladium, that are traded based on their intrinsic metal value.

Bullion Coin
A precious metal coin whose market value is determined by its inherent precious metal content. They are bought and sold mainly for investment purposes.

Bull Market
Market characterized by upwardly moving price trend.

Carry Market
A market situation in which a futures contract for a commodity has a higher value in the nearest delivery month relative to the expiration date.

Close
The official end of a trading session.

Commodity Futures Trading Commission (CFTC)
U.S. federal regulatory agency created under the Commodity Futures Trading Commission Act of 1974. It ensures open and efficient operation of the futures markets.

Deliverable Bar
A precious metals bar with a weight, fineness and hallmark approved as a tradable unit on a commodity exchange.

Depository or Warehouse Receipt
A document issued by a depository institution indicating ownership of a commodity stored in a vault or warehouse.

Derivative
Financial instrument whose value is derived from the underlying actual, futures contract, or other financial instrument. For example, futures contracts are derivatives of physical commodities, options on futures are derivatives of futures contracts.

Face Value
The monetary value of an investment coin, which does not necessary correspond to its actual worth. For example, the face value of a gold American Eagle one-ounce coin is $50, but its actual worth is tied to the spot value of its gold content – a much higher value.

Fineness
The purity of precious metal measured in parts per thousand. A "Good Delivery" bar contains a least 995 part pure gold and no more that 5 parts other metals or impurities. Many gold and silver bullion products, such as the original gold Maple Leaf coins are 99.99% pure gold and are often described as being struck from .9999-fine gold.

Fine Weight
The weight of precious metal contained in a coin or bullion as determined by multiplying the gross weight by the fineness.

Fine Silver
Pure silver. Generally 99.9% pure.

Futures Contract
A contract between a buyer and seller to purchase a commodity or financial instrument at a pre-determined price in the future. These contract are most often liquidated prior to the established delivery date and are typically used more for financial risk management instead of physical supply.

Gold
A soft, shiny, heavy, malleable,and highly ductile transition metal that has long been used as a store of wealth and a standard for currencies worldwide. For centuries, gold has been used in coinage, jewelry, and in countless industrial applications.

Gold/Silver Ratio
The number of ounces of silver required to buy one ounce of gold at current spot prices.

Good Delivery
Approved metals brands acceptable for delivery against the metals contracts.

Hallmark
A stamped impression on the surface of a precious metals bar that indicates the producer, serial number, weight, and purity of metal content.

Hedge
An investment made as a strategy to mitigate risk of adverse price movements in a given asset.

Intrinsic Value
The actual value of the precious metals contained within a bullion bar or coin.

Inverted Market
A futures market is said to be inverted when distant contract months are selling at a discount to nearby contract months; also known as backwardation.

Karat
A measure of the purity of gold. Pure gold is 24-karat.

Legal Tender
In the U.S., coins and paper currency that have been authorized by Congress for the payment of debts owed. This includes circulating coins and all commemorative coins.

Licensed Warehouse
Warehouse that has been approved for the storage of silver or gold deliverable against a silver or gold futures contracts.

Liquid Market
A market characterized by the ability to buy and sell with relative ease.

London Fix
Price set each day in London by five old-line firms. The "fixing price" reflects the price at which buy and sell orders from the firms' customers' are in balance. The London Fix is an internationally recognized benchmark price for that particular moment in time.

Malleable
Allowing change in form under pressure or hammering without rupture or fracture.

Market Value
The total price of a bullion bar or coin inclusive of intrinsic value and any premium or discount.

National Futures Association (NFA)
Futures industry trade association which promulgates rules of conduct and mediates disputes between customers and brokers.

Offer
A motion to sell a commodity at a specified price. Opposite of bid. The Offer price is the price at which a dealer offers to sell a commodity.

Palladium
A rare silver-white metal of the platinum group. Palladium resembles platinum chemically and is extracted from some copper and nickel ores. It is primarily used as an industrial catalyst and in jewelry.

Pd
The chemical symbol for palladium

Platinum
A chemical element in the periodic table that has the symbol Pt and atomic number 78. A heavy, malleable, ductile, precious, gray-white transition metal, platinum is resistant to corrosion and occurs in some nickel and copper ores along with some native deposits. Platinum is used in jewelry, laboratory equipment, electrical contacts, dentistry, and automobile emissions control devices.

Premium
The market value of a coin less the intrinsic value of its metal content. Premiums are set by issuing authorities (e.g., U.S. Mint) and/or bullion dealers and vary by product.

Pt
The chemical symbol for platinum.

Settlement Price
The price established by the Exchange settlement committee at the close of each trading session as the official price to be used by the clearinghouse in determining net gains or losses, margin requirements, and the next day's price limits. The term "settlement price" is often used as an approximate equivalent to the term "closing price." The close in futures trading refers to a brief period at the end of the day, during which transactions frequently take place quickly and at a range of prices immediately before the bell. Therefore, there frequently is no single closing price, but a range of prices. In months with significant activity, the settlement price is derived by calculating the weighted average of the prices at which trades were conducted during that period.

Silver
A chemical element in the periodic table that has the symbol Ag (from the traditional abbreviation for the Latin Argentum) and atomic number 47. A soft white lustrous transition metal, silver has the highest electrical and thermal conductivity of any metal and occurs in minerals and in free form. This metal is used in coins, jewelry, tableware, and photography.

Spot
Term which describes one-time open market cash transaction, where a commodity is purchased "on the spot" at current market rates. Spot transactions are in contrast to term sales, which specify a steady supply of product over a period of time.

Spot Market
A market of immediate delivery of product and immediate payment.

Spot Month
The futures contract closest to maturity. The nearby delivery month.

Spread
The difference between the bid price and the ask price of a bullion bar or coin.

Sterling Silver
Silver of a fineness of 92.5%.

Troy Ounce
The Troy ounce is the traditional unit weight for precious metals, believed to be named after a weight used at the annual fair at Troyes in France in the Middle Ages. Conversion: 1 Troy ounce = 480 grains = 31.1035 grams = 1.09711 avoirdupois ounces.