What drove the historic surge in gold prices in 1987?
Delve into the data surrounding this pivotal year for the precious metal and uncover the key moments and notable fluctuations.
From the January gold price fix data to the upward trajectory observed in May, June, July, August, and September, to the continued trend in October and November, this article analyzes the factors that contributed to the unprecedented rise in gold prices during this significant period.
Key Takeaways
- The gold price in January 1987 ranged from $398.95 to $403.50 per troy ounce, indicating a relatively stable price during that period.
- Gold prices experienced a significant increase in May 1987, reaching as high as $476.50 per ounce, suggesting a bullish trend in the market.
- In June and July 1987, gold prices showed some volatility, with fluctuations between $443.00 and $454.70 per ounce.
- Gold prices in October 1987 witnessed a notable rise, reaching as high as $481.60 per ounce, potentially indicating a surge in demand or market speculation.
Daily Gold Price Data 1968 – 2021
With a dataset spanning from 1968 to 2021, the daily gold price data provides a comprehensive record of the fluctuations in gold prices over the years. Analyzing this data allows us to identify gold price trends and understand the factors that influence gold prices.
Gold prices have shown significant volatility over the decades, influenced by various economic, geopolitical, and market factors. Economic indicators such as inflation rates, interest rates, and currency values play a crucial role in determining gold prices. Geopolitical events, such as wars or political instability, can also impact gold prices as investors seek safe-haven assets. Additionally, market dynamics, including supply and demand factors, investor sentiment, and speculations, can drive gold price movements.
The London Bullion Market Association (LBMA)
The London Bullion Market Association (LBMA) plays a crucial role in the gold market, overseeing the global trading and settlement of gold and silver bullion. As the world’s largest over-the-counter (OTC) market for precious metals, the LBMA provides a platform for market participants to trade gold and silver in a transparent and efficient manner.
Its members include banks, bullion dealers, and refiners, who adhere to high standards of integrity and professionalism. The LBMA sets standards for the quality and purity of gold and silver bars, ensuring the consistency and reliability of the market.
The association also publishes daily benchmark prices, known as the LBMA Gold and Silver Prices, which are widely used as reference rates in the global gold market.
The LBMA’s role in facilitating global gold trading has contributed to the liquidity and stability of the market, which may have had an impact on the surge in gold prices in 1987.
Western Vs. Eastern Gold Price Compounding
Facilitating global gold trading, the London Bullion Market Association (LBMA) also played a role in the compounding of Western and Eastern daily gold prices since 1987. This has allowed for a comparison between gold prices in 1987 and 2021, highlighting the impact of geopolitical events on gold prices.
- Gold prices in 1987:
In January 1987, gold prices ranged from $398.95 to $403.50 per troy ounce. By October 1987, prices had increased to a range of $459.45 to $481.60 per ounce. In November 1987, prices ranged from $458.60 to $470.10 per ounce. - Gold prices in 2021:
The current gold prices in 2021 have experienced fluctuations due to geopolitical events such as the COVID-19 pandemic, economic uncertainties, and global tensions. These factors have influenced the demand and supply dynamics of gold, resulting in price volatility. - Impact of geopolitical events:
Geopolitical events have a significant impact on gold prices. For example, during times of political instability or economic crises, investors tend to seek the safe-haven qualities of gold, driving up its price. Conversely, periods of stability and economic growth may lead to a decrease in gold prices.
Gold Price Containment Mechanism and AM/PM Gold Fix Rigging
To further explore the impact of geopolitical events on gold prices, it is crucial to understand the gold price containment mechanism and the practice of AM/PM gold fix rigging.
The gold price containment mechanism refers to the manipulation of gold prices through the use of derivatives and the rigging of the AM/PM gold fix. This mechanism has been in place since the failure of the London Gold Pool price fix in the 1960s.
The practice involves influential players in the gold market colluding to manipulate the price of gold for their own benefit. This manipulation has far-reaching consequences for the global economy, as it distorts the true value of gold and undermines market integrity.
It is important to address this issue to ensure a fair and transparent gold market that accurately reflects supply and demand dynamics.
Failure of the London Gold Pool Price Fix
After the gold price containment mechanism and AM/PM gold fix rigging, the failure of the London Gold Pool price fix in the 1960s significantly impacted the stability and integrity of the gold market.
The failure of the London Gold Pool price fix had a profound impact on the global gold market, as it revealed the extent of manipulation of gold prices in the 1960s.
The failure of the price fix undermined investor confidence and raised concerns about the fairness and transparency of the gold market.
It also highlighted the vulnerability of the gold market to manipulation and raised questions about the effectiveness of price fixing mechanisms.
Gold Price Fix Data in January 1987
In January 1987, the gold price fix data revealed fluctuations in the value of gold per troy ounce. Compared to other months in 1987, the gold prices in January were relatively stable. The table below displays the AM and PM gold price fix data for January 1987, as well as the prices for May, June, July, August, and September.
| Date | Gold Price Fix AM ($) | Gold Price Fix PM ($) |
|---|---|---|
| January 2 | 402.40 | 403.50 |
| January 5 | 399.00 | 398.95 |
| January 6 | 401.70 | 401.70 |
The factors influencing these trends in January 1987 were likely the overall economic stability and market conditions during that period. While gold prices experienced fluctuations in other months, January saw relatively consistent prices. Further analysis would be needed to determine the specific factors that influenced these trends.
Gold Prices in May, June, July, August, and September 1987
During the months of May, June, July, August, and September 1987, gold prices exhibited notable fluctuations and reached unprecedented heights. The impact on the global economy was significant, as investors closely monitored the gold market during this period. The role of central banks in the gold market became increasingly important, as they sought to stabilize the prices and prevent excessive volatility.
Key developments during this time included:
- May 1987: Gold prices surged, reaching as high as $476.50 per ounce, driven by geopolitical tensions and concerns over inflation.
- June 1987: Prices experienced a slight dip, with fluctuations ranging from $443.40 to $454.70 per ounce, as market sentiment shifted.
- July 1987: Gold prices continued to fluctuate within a narrow range of $443.00 to $449.50 per ounce, as investors awaited further economic indicators.
These fluctuations in gold prices had a profound impact on the global economy, influencing investor sentiment and shaping monetary policy decisions. Central banks played a crucial role in managing the gold market, using their reserves to stabilize prices and mitigate potential disruptions. The volatility and uncertainty during this period underscored the importance of gold as a safe haven asset and highlighted the interconnectedness of global financial markets.
Gold Prices in October 1987
The gold prices in October 1987 witnessed significant fluctuations, impacting global markets and investor sentiment.
During this month, the price of gold experienced both highs and lows, reflecting the uncertainty and volatility in the financial markets.
On October 20, 1987, the price of gold reached $479.50 per ounce, marking a notable increase. However, the price declined in the following days, reaching $468.00 per ounce on October 30, 1987.
These fluctuations in gold prices during October 1987 were reflective of the broader economic instability and the impending stock market crash that occurred later that month.
Historically, there has been a correlation between gold prices and stock market crashes, with investors turning to gold as a safe-haven asset during times of economic uncertainty.
The fluctuations in gold prices in October 1987 therefore had a profound impact on the global economy, contributing to the overall instability and financial turmoil of that period.
Gold Prices in November 1987
November 1987 witnessed further fluctuations in the price of gold, reflecting the ongoing economic instability and the impact of the impending stock market crash. Several factors influenced gold prices during this period:
- Geopolitical Events:
- The escalating tensions between the United States and the Soviet Union, including the withdrawal from the Intermediate-Range Nuclear Forces Treaty, added to the global uncertainty and increased demand for safe-haven assets like gold.
- The continued conflicts in the Middle East, particularly the Iran-Iraq war, also contributed to the geopolitical tensions, further boosting gold prices.
- Market Sentiment:
- The anticipation of the stock market crash, which eventually occurred on October 19, 1987, led investors to seek refuge in gold as a hedge against the potential financial turmoil.
- The volatility in other financial markets, such as currencies and bonds, also influenced gold prices as investors looked for stability.
- Economic Indicators:
- The weak economic data, including declining industrial production and rising unemployment rates, raised concerns about a global economic slowdown, prompting investors to turn to gold.
These factors combined to drive gold prices in November 1987, as investors sought the perceived safety of the precious metal amidst the uncertain and turbulent economic and geopolitical landscape.
Frequently Asked Questions
How Did the Gold Price Containment Mechanism Using Derivatives and Am/Pm Gold Fix Rigging Work?
The gold price containment mechanism using derivatives and AM/PM gold fix rigging aimed to control and stabilize gold prices. This involved the use of financial instruments and manipulation of the daily gold fixing process to influence market outcomes.
What Were the Factors That Contributed to the Failure of the London Gold Pool Price Fix in the 1960s?
The failure of the London Gold Pool price fix in the 1960s was influenced by several factors. These factors included the inability to control gold prices, lack of coordination among participating countries, and the growing demand for gold as a safe-haven asset.
Were There Any Significant Differences Between the Western and Eastern Daily Gold Price Compounding Since 1987?
There were significant differences between western and eastern daily gold price compounding since 1987. These differences can be attributed to market dynamics in gold trading and the varying factors that influence gold prices in different regions.
What Were the Reasons Behind the Surge in Gold Prices in 1987, Breaking Records?
The surge in gold prices in 1987, breaking records, can be attributed to several factors, including global economic uncertainty, geopolitical tensions, and increased demand for safe-haven assets. These reasons drove investors towards gold, leading to its remarkable price increase.
How Did the Gold Prices in 1987 Compare to the Overall Trend From 1968 to 2021?
Gold prices in 1987 experienced a significant surge, breaking records. When compared to the overall trend from 1968 to 2021, these prices exhibited a notable deviation, impacting the global economy.
