A Real Gold High
January 26, 2011 by Chip Wood
Here’s something Scrooge McDuck would remember. On Jan. 21, 1980, gold hit what was then its all-time high, when it briefly touched $850 an ounce. When people speak of “gold’s glory days,” though, it’s a bit of a misnomer. Gold was above $800 for only one day. And it was above $700 for only four days. That’s one week for a bubble that saw the precious metal rise 500 percent from $160 an ounce in 1974, when Americans were once again permitted to own the Midas metal.
It took three more decades for gold to surpass that previous high. Now we take prices above $1,000 an ounce as "the new normal." But here’s something to consider: Gold would have to pass $2,400 an ounce to equal its previous high in inflation-adjusted dollars. It’s a long way from those levels.
And here’s another golden footnote from history. It was on Jan. 24, 1848, that James Marshall discovered some golden nuggets while prospecting at John Sutter’s mill near Coloma, Calif. Word of his discovery lured thousands of prospectors to the area. Over the next 12 months they extracted more than 440,000 ounces of gold, or 10 times the previous year’s yield in the entire country.
In one of many ironic footnotes from that era, neither Sutter nor Marshall profited from the discovery. They were unable to defend their claims against the 49ers who spread across the land. Both men subsequently died in poverty. At least history remembers their names.