In the early 2000s, the price of gold got off to a slow start, but two years later, it began its inevitable ascent. Over the last two decades, the price of gold, an ingot and investment coins like the Napoleon have continued to climb. In fact, we witnessed a 400% increase in euros between 2000 and 2020! Let’s take a look back at these two roaring decades for gold!
From 2006 to 2012: A resurgence of gold
During the subprime crisis, the price of gold hit its first peak in January 2009, at more than €700 per ounce. In 2008, when the biggest economic crisis of the 21st century struck, the price of gold skyrocketed. Savers around the world were looking to protect their savings, and gold – like always – was shining bright, attractive and reassuring.
And in the period beginning in 2006, the price of gold continued its rise. It reached its highest level at €1,380 per ounce in August 2012, a record which would only be beaten in February 2020. This marked a staggering change in the price of gold, in the space of six years: up 245%!
From 2012 to 2018: A plateau around €1,000 per ounce
After the spectacular bounce-back of the 2000s, the price of gold took a new downward turn, by nearly 30%. By 2013, the winds had changed, and prices declined accordingly, falling from $1,280 in July 2013 to $1,070 in December 2015, before gradually rising again to $1,300 in January 2018.
Although this drop was substantial, the price of gold remained at historically high levels. As for the decrease observed during this period, it was not limited to gold. We also saw the same trend in other precious metals like platinum and silver, as well as in industrial metals like copper, nickel, and tin. According to analysts from Slate, this loss of momentum can be explained by a combination of factors, including a reduction in gold trackers from institutional investors and the debt of certain European countries like Cyprus and Greece, which is believed to have been paid off in part through the sale of their gold.
From 2018 to the present: Gold prices in euros back on the rise
In the first few months of 2018, several countries’ central banks took advantage of this to expand their gold reserves. According to the World Gold Council’s report on the first half of 2018, more than 190 tonnes of the precious metal were added to the coffers of national institutions. This was an 8% increase over the same period in 2017. Most of those States wanted to lessen their dependence on the dollar or simply diversify their monetary guarantees.
In 2018, the price of gold was at its lowest, at a time when stock markets were closing at their highest. The Dow Jones fell on 4 October 2018 and later crumbled throughout the month of December. This was the worst December since the creation of market indexes. On the completely opposite end of the spectrum, it was at this same time that the price of gold swung upwards.
The prices of both shares and gold then spiked between January and August of 2019. Over the course of seven b, the price of gold climbed by 30%, achieving and breaking through the high point of 2012 several times.
February 2020: New records for the price of gold
Unlike the previous decade, trends in the price of gold did not run counter to the different stock market closes. In fact, the Dow Jones and CAC 40 market indexes were at the top of their game… just like the price of gold. Monday, 24 February 2020 made gold history when, for the first time ever, the price per ounce was recorded at €1,553, or €49.93 per gram.
Prices on the rise for 20 years
After decades of stability, the price of gold fluctuated considerably in the last 40 years.
The beginning of the 2000s contained the seeds of America’s economic collapse. The burst tech bubble, the trauma of the destruction of the Twin Towers, excessive international competition and more all prompted the US public authorities to get creative in order to avoid the worst. The obvious solution was to stimulate real property by means of astounding money creation which slashed interest rates to very attractive levels. Economic growth and employment were going full steam ahead, albeit with the usual inflationary corollary (decline in the value of a dollar). In other words, there were several causes underlying the rise of gold:
- Weakening of the dollar, the currency in which gold is expressed
- Very sustained demand for gold from countries with growing middle classes
- Insufficient supply as inventories were exhausted.
In the last 11 years, there many additional factors bolstering the price of good: two crashes (tech bubble in 2001 and stock market crash of 2008), the subprime crisis, bank failures (along with the collapse of Lehman b), fear of inflation, the European sovereign debt crisis, and so on. All dramatic events contribute to increases in the value of gold, with people fighting over it in crisis periods, and risk aversion is also a component.
Gold is seen as the safe haven investment par excellence, making it the asset that all investors, savers and central banks want to stockpile with the economy and finance begin to waver. All it takes is one or two detonators in an explosive atmosphere to trigger a new gold rush.