caseyresearch.com / By Jeff Clark / March 5, 2013
Goldman Sachs has lowered its gold price projections and says the metal is headed to $1,200. Credit Suisse and UBS are bearish. Citigroup says the gold bull market is over.
So I guess it’s time to pack it in, right?
Not so fast. As we’ve written before, these types of analysts have been consistently wrong about gold throughout this bull cycle. Another reason to disagree, however, is history; we’ve seen this movie before. In the middle of one of the greatest gold bull markets in modern history – the one that culminated in the 1980 peak – gold experienced a 20-month, one-way decline. Every time it seemed to stabilize, the bottom would fall out again. From December 30, 1974 to August 25, 1976, gold fell a whopping 47%.
1976 had to be a tough year for gold investors. The price had already been declining for a year – and it just kept on sinking. Since that’s similar to what we’re experiencing today, I wondered, What were the pundits were saying then? I wanted to find out.
I enlisted the help of two local librarians, along with my wife and son, to dig up some quotes from that year. It wasn’t easy, because publications weren’t in digital form yet, and electronic searches had limited success. But we did uncover some nuggets I thought you might find interesting.
The context for that year is that the IMF had three major gold auctions from June to September, dumping a lot of gold onto the market. Both the US and the Soviet Union were also selling gold at the time. It was no secret that the US was trying to remove gold from the monetary system; direct convertibility of the dollar to gold had ended on August 15, 1971.
The public statements below were all made in 1976. You’ll see that they aren’t all necessarily bearish, but I included a range to give a sense of what was happening at the time, especially regarding the mood of the gold market. I think you’ll agree that much of this sounds awfully darn familiar. I couldn’t resist making a few comments of my own, too.
To highlight the timing, I put the comments into a price chart, pinpointing when they were said relative to the market. Keep in mind as you read them that the gold price bottomed on August 25, and then began a three-and-a-half year, 721% climb…