GOLD PRICES SOAR:

January 14, 1980

After being released from government control, gold reaches a new record price on
January 14, 1980, exceeding $800 an ounce.Gold is scattered sparsely throughout
the earth's crust and since ancient times has been treasured for both its
scarcity and metallurgic properties. Before the 19th century, most nations
maintained a bimetallic monetary system, which often included gold but consisted
mainly of silver. Beginning in Great Britain in 1821, units of currency were
redeemable for a fixed quantity of gold, a change that Britain hoped would
stabilize its rapidly growing economy. As the Industrial Revolution spread,
other countries followed suit, and by the late 19th century most industrialized
nations were on the gold standard. In the new global economy, the common
standard facilitated international monetary transactions and stabilized foreign
exchange rates.The reign of the full gold standard, however, was short. In 1914,
the curbing of gold exports at the outbreak of World War I forced recourse to
inconvertible paper currency. After the war, the gold standard returned, but
economic growth in the 1920s overtook the gold reserves, and some nations
supplemented their reserves with stable currencies like the pound and dollar,
which like gold had obtained a measure of permanent abstract value in people's
minds.In 1930, the world economy collapsed and the gold standard with it. In
response, most governments sharply limited the convertibility of paper currency.
In the United States in 1933, President Franklin D. Roosevelt prohibited the
circulation of gold coins; though gold was still used in defining the value of
the dollar. In the United States and many other countries, currencies remained
"pegged" to gold until the 1970s, when dwindling global reserves signaled the
final death knell of the gold standard.In 1971, the United States suspended the
free exchange of U.S. gold for foreign-held dollars, then in 1974 lifted its
four-decade ban on the private purchase of gold. At that time, gold bullion was
being traded in European markets at highs approaching $200 an ounce. In 1975,
the U.S. government began to sell some of its holdings on the open market and in
1978, along with most other nations, officially abandoned the gold standard.
After being released from government control, the price of gold soared, with its
most staggering increase recorded January 14, 1980, when the price jumped to
more than $800 an ounce.