GOLD THEN

Gold_Ex_orderGOLD has had an interesting history the last century.  On Sep 12, 1919 N M Rothschild & Sons, along with 4 other traders and refiners, formed the original GOLD FIXING membership in the City of London and soon met at the Rothschild offices to FIX the daily price, starting at GB Pound Sterling 4.9375 per troy ounce. ($19.39 then)

The “20th century American GOLD trading story” begins on April 05, 1933, as FDR signed Executive Order 6102 criminalizing GOLD possession over 5 troy ounces, with certain exemptions, by U.S. citizens.  The Order demanded, under threat of severe penalties, Americans sell their GOLD to the Federal Reserve within 25 days, on or before May 1st, for $20.67, then the LONDON FIX.  A year later FDR revalued GOLD 69.3 % to $35.00, a price that held until the late 1960’s when tremendous Sovereign GOLD redemptions at the FED turned into a buying frenzy. Led by the French converting excess U.S. Dollars into GOLD caused an uncoupling from the 35.00 benchmark, heading into the low 40’s initially, before drifting back to test 35.00 again.  Between May 1934 and the birth of GOLD futures trading in DEC 1974, the lowest LONDON POOL FIX was 34.75 on JAN 16-19, 1970, just 2 weeks prior to the Tet Offensive in Vietnam. This was the start of GOLD’s 10 year bull market run to 873.00 in JAN 1980. President Nixon shut the (foreign Sovereign’s exclusive) $35.00 for 1 OZ GOLD redemption window at the FED on Aug 15, 1971, thus severing long standing Dollar Gold convertibility.  “The Dollar is a good as Gold” was thrown onto the ash heap of history.

GOLD futures revealed its record LOWEST DAILY close (102.80) on AUG 30, 1976, with its presentation of an elegant (Active Daily), only visible as a Logarithmic Closing Line LCL 0.272 retracement from 20.67 (last seen in May 1934, just before the FDR revaluation), to the subsequent top daily close (187.70) on FEB 20, 1975.  The Logarithmic Closing Line (LCL) chart frame was little known then, and not on the mainstream radar even today! This LCL 0.272 on the record lowest daily close is identified at 103.00 with astounding precision, within 0.20 or 2 ticks!