Jobs Data and Gold’s History

Last week gold prices dropped about $25. A new U.S. jobs report was released on Friday which offered a few clues from gold’s history that may shed some light on the future.

Job Growth and Gold Values

The U.S. economy boasted 195,000 new jobs in June. However, the unemployment rate was unchanged and remained at 7.6%. A similar scenario occurred last month that also caused a dip in prices. Although last month did see a lull in prices, gold was quick to recover in the following weeks. The real question still remains if the Federal Reserve will decide to taper the monetary stimulus program. Ben Bernanke has often mentioned tapering may begin when the unemployment rate improves. For now, investors await more news from jobs reports and the Fed.

A Brief Look at Gold History

In a recent article by Business Insider, Tom Fitzpatrick discusses similar behavior in gold prices during the 1970s. He mentions gold going through a similar correction before making a massive leap again. He stated, “In 1976 the gold correction ended in August and the equity market began a deep correction in September (27% over 18 months). During that period gold rallied by about 78% and over the 1976-1980 period it multiplied in value by a factor of 8 from just over $100 to over $800.”

Are we laying the foundation for a bull market again? Does gold just need some time to regroup before it makes another run? Only time can tell and there are many variables at play that can affect the price of gold.

Long-Term Gold Values

While it’s often easy to get caught up in the day-to-day news that causes minor shifts in the gold market, it’s important to remember the long-term trends of gold. Here is a brief look at the average prices of gold per ounce during the past 30 years (values are approximate):

  • 1975 – – $150
  • 1985 – – $310
  • 1995 – – $385
  • 2005 – – $460
  • Today – – $1,200

Are things as bad as they seem? It may be time to think about long-term investments and the right time to buy. Yes, gold is down significantly from its high, but this is to be expected. Many individuals who believe gold’s value will continue to increase view this lull in price as only temporary.

For individuals looking to invest in gold, American Bullion specializes in adding physical gold or silver to individual retirement accounts. To learn more about your options for opening a Self-Directed Precious Metals IRA, please contact American Bullion at 1-800-326-9598 to speak with a precious metals specialist. The rollover process is tax-free and hassle-free.


Reference: BusinessInsider