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Forwarded To You By: WBJordan Investments, Inc

The Day the World Changed
The Impact 14 March 1968 had on Money,
Gold & Mining Shares
Part 1

Mark J. Lundeen
mlundeen2@comcast.net

14 February 2006

Part 1 of this article will examine the significance of the London
Gold Pool and the global monetary regime from the Bretton Wood's
Accords, to the present time. It also examines the shallowness of
the digital financial archives. In the age of information, investors,
economists and makers of "policy," may not have the necessary
information to properly examine our current age of inflation.

Part 2 of this article will examine the effects of monetary inflation on
the seven decades of recorded price history found in the Barron's
Gold Mining Index (BGMI). Gold mining shares have proven to be a
powerful indicator of future financial trends that everyone with
money in the markets should be aware of.

Part 1
The current bull markets in precious metals and the companies that mine and
explore them have their foundations laid in 1944. In 1944 the Bretton Woods
international monetary conference was convened and then submitted its
recommendations to the world for approval. In 1945 this conference's
recommendations were ratified and signed into law by the United States and
adopted by the United Nations.
The Bretton Woods Accords (BWA) created a workable post war monetary
regime. However the world's central banks and national governments refused to
submit to the monetary restraints provided by this conference. The results, a bull
market of historic proportions for precious metals in the early 21st century. The
world is about to abandon the US dollar, just as the United States abandoned the
Bretton Woods Accords fifty years earlier.
On the evening of 14 March 1968 the following press release was issued from
Buckingham Palace, United Kingdom.
The London Gold Market will be closed today, Friday, March 15. This is at
the request of the United States Government.
At a meeting of the Privy Council held this morning at Buckingham Palace,
Her Majesty the Queen approved a proclamation appointing Friday, 15th
March, to be observed as a Bank Holiday throughout the United Kingdom.

1

had promised to pay one ounce of US Treasury Gold for every $35 paper US dollars presented to the US Treasury by foreign central banks. The classical gold standard held that gold was money and nothing else was money. I believe by intent. This feature of the BWA officially excluded gold from serving as a medium of international payment. it did. the post war monetary regime was created at an international conference convened in New Hampshire. With the enactment of the BWA. When this press release was issued. the United States by international treaty. The authorities are requesting that the stock exchanges also be closed. several things happened. Gold was to play an instrumental part in the post war monetary system. and nothing else was. by intent. Gold would no longer function as money for international payments. In 1944. upon the request of the United States. the dollar was fixed to the price of gold at a ratio of $35 paper dollars for each ounce of US gold held in the bullion reserves of the United States. big enough for an ocean of liquidity to flow through. This was not so with the BWA. The BWA was submitted to. but in a manner only bureaucrats and members of academia could conceive of. The recommendations of this conference were called The Bretton Woods Accords. Paper money in a gold standard is only a callable debt. USA. The $35 paper US dollars to one ounce of US treasury gold. To reassure the international community that the United States would not issue excessive paper dollars. being asked to provide their domestic customers with normal cash requirements in sterling. with non monetized gold backing the US dollar. made inflation with paper currency impossible. So. The Bretton Wood's Accords had a loop hole. Rather. I must first give a brief history of money from 1944 to 14 March 1968. To fully comprehend the great importance of this momentous event of monetary history. however. find it necessary to have a Bank holiday. This made the US dollar function as gold once did in the settlements of international payments between national central banks. the BWA did not revive the classical "Gold Standard" of the pre August 1914 era.The banks are. the US dollar was to function as money for international payments. 2 . and suspend the trading of its stock and gold markets for an unspecified period of time? Why did the United States feel it necessary to make this request? There is much not said in this press release from Buckingham Palace. by its issuer to any holder of the paper note. payable in gold upon demand. The BWA made the US dollar the "world's reserve currency". The classical gold standard. And soon. -End- What happened? Why did the government of the United Kingdom. This is true to the present day. then ratified by the United States Senate and then signed into law by the President. The World Bank and the International Monetary Fund were created to safeguard the post war international monetary system. was a statutory requirement pending upon the United States Government after the Bretton Woods Accords was signed into law.

the government of the United States promised not to print more units of the world's reserve currency (the US dollar) than it had in gold to back those paper dollars. Gold plays no favorites no matter who you are. When paper replaces gold for payment. Looking at my above chart. By 14 March 1968. the United Kingdom had decided that enough was enough. Her Majesty's government since 1960 had assisted the United States Government in a fraud. On 14 March 1968. When physical gold is used in payments. when your gold is gone. Whenever paper money replaces gold money for payments. The only check on the spending of those who control the monetary printing press is self control.97 paper dollars into circulation for every 3 . For the past eight years the UK had redeemed its own gold to honor American gold obligations. the United States had issued 3. In 1945. we can see the fraud in hard data. is a much rarer commodity than gold. this is true for everyone.the United States and its paper US dollar. In a gold standard. In 1945. you must stop your spending and go back to work to earn more gold.This important clause in the BWA was intended to guarantee the honesty of the issuer of the new "world reserve currency" . This was not to be so for long. honesty is always the primary issue. no one is allowed to buy more than they have in gold to spend. but those people who control of the monetary printing presses. when it comes to paper money. and withdrew from the London Gold Pool. This was the critical check against US dollar inflation. the quantity of paper dollars in circulation roughly matched the quantity of gold dollars held in the US gold reserves. marks the point in time when the British government would no longer assist the United States in maintaining the fiction of the $35 paper US dollars for an ounce of US gold held in reserve. The above press release issued from Buckingham Palace. History has proven that self control.

then the effects of inflation would be rightfully placed upon the shoulders of the monetary "policy makers." Secretary of the Treasury. one only had to subscribe to Barron's to get this information. This was clearly a violation to the letter and spirit of the Bretton Woods Accords. This concept of gauging monetary inflation in terms of the inflation's effects on prices was conceived by those who wished to confound the understanding of the public of what the "policy makers" were doing to their paper US dollars. The United States itself soon refused to redeem its own paper money for its gold reserves. History will record that CPI measured inflation was a fraud upon the paper US dollar in both its conception and execution. The United States was issuing currency in excess to its gold reserves. The prudent in the early 1960s understood that the dollar was still a valuable asset. With the mathematical certainty of the law of supply and demand. Prices were going to rise because of this. but the decision of the United States to inflate the reserve currency would make their paper US dollars a wasting asset in the years to come. by changing the definition of inflation to its effects upon prices. inflation was defined as an increase in the total stock of money in circulation. 4 . If inflation is understood as an increase in the total supply of money in circulation. This run on the US gold reserves would continue until August 1971. rising prices were understood as the effects of this inflation in the paper money supply." However. John Connally told the world: "the dollar may be our currency but it is your problem. Shame on Academia for assisting in this fraud called the Consumer Price Index (CPI). Few people understand this in 2006." Had President Nixon not done so. the United States would have lost all of its gold. the "policy makers" could now blame union wage hikes. all existing paper US dollars would lose value over time. On 15 August 1971 "Nixon Closed the Gold Window. Paper US dollars were presented to the US Treasury and their owners demanded that the United States fulfill its legal obligations of surrendering one ounce of US gold for $35 US paper dollars.one dollar in gold it possessed in its reserves. but enough did in 1960. The word was getting out. In 1968. It was not done in secret. OPEC. A run on the US gold supply was on. or the corner drug store's greed in rising prices. as the United States increased its issuance of paper US dollars into circulation.

The US dollar is still the world's "reserve currency" but for how much longer? With the certainty of thousands of years of history supporting me. President Kennedy allowed the United States to conduct its "monetary policy" outside the frame work of the Bretton Wood's Accords. This is no monetary policy. whose value is secured only by the ever growing supply of US Treasury Debt. This amazing inflation of CinC will prove to be problematic for the future value of the US dollar. But remember.President Nixon is blamed for the collapse of the Bretton Woods Monetary Accords. but it is an accurate description of the current state of affairs with the US dollar. then the current monetary standard is one of endorsing monetary inflation with no limits. but brought up to date for February 2006. 5 . They did not as we can see below. Gold prices today would still be at $35 an ounce had the United States Government restricted its issue of paper dollars "Currency in Circulation" (CinC) to the limits of its gold reserves. If the modern monetary standard is the dollar standard. much damage was done before he came to office in 1969. global monetary policy has been one of no monetary policy. This chart explains why inflation is currently defined by its effects rather than its root cause. This conduct was in contempt of the laws of the United States and a legally binding. I will show in part 2 of this article that wealth is walking rather briskly towards the dollar exits. I can say that only gold and silver can be trusted as a form of money that will keep its value over time. the dollar is the American dollar. ratified international treaty. His closing of the US gold window was the predictable end of a long chain of mendacity and machinations by central banks and governments internationally. It would be accurate to state that since the Administration of President Kennedy. The above chart was constructed using the same data series of dollars paper and dollars gold we saw in the first chart. but as you can see in the above table.

As a consumer of financial and economic research. Without this data. utopian visions of social justice. Today. housing values and stock prices have gone up while oil and basic commodities have trended down or remained steady. an inflationary dollar policy will remain an entrenched fixture until economic catastrophe strikes. The data in a digital format. where it was said that "dirt and water in." Their motives are as many as there are "policy makers": favorable public opinion polls. but what cannot be found. Today." Today. or the size of their year end bonuses are all factors in this inflationary "monetary policy. but I suspect that most college professors teaching Economics 101 have neither seen these two charts. it seems obvious to me that financial authors seldom use the historical data series published decades ago in Barron's. and other historical series on the internet. as well as making phone calls to sources. In writing this article I used the internet search engines at least a dozen times to verify names and dates. the "policy" formulated by the Wall Street / Washington Axis was to attempt to funnel the inflationary price effects into financial assets. while stemming the effects of inflation away from cost of living items. So for decades. This flood of paper US dollars into the economy has to have its impact felt somewhere. I have come to the conclusion that currently all too many "policy" decisions are made constructed from bricks of mud. I personally had to pay quite a bit for parking and spend many more hours than I care to remember. Type in the words "London Gold Pool" to Yahoo or Google and one receives a massive amount of information. or have the means to construct them. I've spent considerable amounts of time looking for these. one seldom hears the old axiom from the early age of computing. Seeing precious metals increasing their valuations is always the big bug-a-boo of any inflationist. Petty costs and tedium have raised a wall between this data and the computer. I am sure that much downward pressure was also applied to gold and silver prices. Not any more.As the United States has a two year election cycle where its citizens get to vote for those politicians who promise the most for their votes. In the comfort of my home. I found facts that years ago would have cost me money for parking to spend a day of my time at a research library. Entering numbers from old issues of Barron's into a spread sheet is a tedious task. what can be found with a computer on the internet is simply amazing! What concerns me about the internet is not what can be found using a computer. I believe that this is why all too few in finance and economics are aware of this rich source of information. I could not find this information in a digital format. equals mud out. To obtain data on the US gold reserves and CinC. This is why for decades. prices are only the effects of "policy. I don't believe this data is available in the digital public domain. used in my first two charts was something I could not find on the internet. I would be pleasantly surprised if I were wrong. what is the point of teaching Bretton Woods or Nixon's closing the gold window? This expansion of CinC and 6 ." but this is a valid concept." dictated by entrenched "policy makers" who have deemed it necessary and appropriate for "sustained growth.

our information age is an epoch of ignorance of past bear markets. Decades long. Until someone makes the effort to digitalize these decades old data series. (and I suspect their professors) as the American continents were to Europeans before 1492. The digital format of the PC has effectively eliminated an enormous body of source material for economic research. a hamburger and their college tuition cost them in 1971. 7 . this is how it will remain. and what students are paying now. Any reference to the time before inflation became a permanent and accepted fixture in our world rates only a dismissive comment in main stream academia. Go to any college and clearly students generally use computers for research. lets look at the below chart of the Barron's Gold Mining Index and the much more modern XAU. Today. not old reference books. In front of a CNBC camera. What a difference 35 years has made! It seems to me that current ECON 101 as taught today is only an explanation of how the current "policy makers" manage our current inflationary age. the PC has proved to be the bane to the larger body of financial and economic knowledge that existed previous to 1981. Because the digital age was born concurrently with the great American bull market in stocks. With the computer. However. what rests undisturbed on book shelves. These economists remember what a home. it is not hard to be bullish on high tech stocks and bearish on gold and silver when your digital data sets begin in the 1980's! To prove my point. The Failure of Bretton Woods occurred in the life time of many senior economists. But the computer has brought with it censorship of information more effectively than a totalitarian dictator could ever achieve. The compiling of old economic data series from decades ago is not considered material to complete a course objective in economics. the world now has fantastic access to information. is as far away from these undergraduates.1970s. The August 1981 introduction of IBM's Personal Computer (PC) has had tremendous effects upon the financial industry and schools of economics. just feet away from busy students gazing at their computers.its effects upon the US dollar were major news stories in Barron's all during the 1950s . college professors don't spend much time at all on the origins and consequences of past inflationary eras. The fact is. statistical data series recorded on paper with ink is not the preferred medium in the digital age. The digital archives are a wide but shallow pool that does not contain the great body of information that existed previous to 1981.

Mark J. the Philadelphia Stock Exchange did not trade options on the XAU until 19 December 1983. In the age of information.net 21 February 2006 Part 1 of this article will examine the significance of the London Gold Pool and the global monetary regime from the Bretton Wood's Accords.Most professional opinions on the gold mining industry are based upon the XAU options index. It also examines the shallowness of the digital financial archives. Gold & Mining Shares Part 2 Mark J. However. long term understanding of the gold mining industry is not possible using the XAU data series. The current public information on the gold mining industry is tightly contained within the digital information bubble. investors. This means that most opinions on gold mining are based upon information whose genesis occurred a full three years after the October 1980 top in the gold mining shares. to the present time. Lundeen mlundeen2@comcast. Lundeen mlundeen2@comcast. 8 . social unrest and monetary treaty abrogation are not contained within the XAU's record. The impact of wars. It is time to add five more decades to the digital record.net The Day the World Changed The Impact 14 March 1968 had on Money. A strategic.

Part 2 of this article will examine the effects of monetary inflation on the seven decades of recorded price history found in the Barron's Gold Mining Index (BGMI).2001 gold share bear market. An interesting point to know about the Barron's Gold Stock Index is that it is the sole survivor. So it is fair to say that the XAU is primarily a partial record of the post 1980 . However. They provide a unique piece of history of the American stock market from a time when vacuum tubes were high tech to the era of computer microprocessors. Upon careful examination of this record. The BGMI has been continuously published since before Hitler invaded Poland in 1939. Dow Jones discontinued their excellent 20 Bond Average data just a few years ago. This was three years after the October 1980 bull market top in the gold mining shares. To my knowledge. The 67 years of data contained in the BGMI data set is the definitive source of information on gold mining shares price action under all economic circumstances. 9 . textiles. Gold mining shares have proven to be a powerful indicator of future financial trends that everyone with money in the markets should be aware of. This should not be surprising. Barron's discontinued their Barron's Stock Averages in October 1988. Part 3 of this article will further examine the seven decades of the Barron's Gold Mining Index using a charting technique I call The Bear's Eye View (BEV Chart)." may not have the necessary information to properly examine our current age of inflation. Likewise. an antique remnant of the now long forgotten Barron's Stock Averages. Currently the widely followed XAU data set is the source data for most professional opinion on the gold mining industry. Except for their Barron's Gold Stock Average. But like so much of today's digital data. Barron's published for 50 years (1939 to 1988). now called The Barron's Gold Mining Index (BGMI). The DJ 20 Bond Average was an important historical bond data series for utility and industrial bonds that spanned 64 years from 1938 to 2002. auto manufacturing and many other industries to fade into oblivion. US monetary inflation alone has driven gold mining shares to their price extremes. political chaos. steel. the reaction of gold mining shares to war. The XAU is a modern index of gold mining shares that includes volume and open interest data. both up and down. Using this technique I will prove my thesis that since 1938. Part 2 The Barron's Gold Mining Index (BGMI) is a weekly data series that spans seven decades from 1939 to the present date. Sorry to say that Barron's allowed five decades of their publication's recorded history for oil. stock averages for over 20 industrial sectors. the XAU was first traded on 19 December 1983. only the BGMI records seven decades of history for the gold mining shares. it is confined within the digital data bubble I noted in Part 1 of this article. and currency inflation is quite different from what current expectations would have us believe. economists and makers of "policy.

and quaintly antiquated historic data series.php Along with the above data on your computer.sharelynx. Laird. including the BGMI. As a service to the readers of this article. To do this. Europe and anywhere else. I may be the first person to have made the effort in compiling the BGMI into a digital format. Maintaining historical financial data is my hobby . I wish they would be more respectful of their decades long. you need to watch each episode or the ever changing plot will leave you behind. Nick Laird's Sharelynx webpage. do not now. These old "averages" were based upon a 19th century method of using a simple average on share or bond prices to compute market measurements.jsp?page=1012 The amazing statistical tables published each week in Barron's have been a wonderful resource of hard statistical data for serious investors since 1921. the BGMI needs to be passed around. Most likely. I hope this article attracts the serious attention that the BGMI rightfully deserves. They must have seemed quaint to the vast majority of market watchers.providing a 10 . Barron's subscriptions https://services. none of the antique averages did. you will also need a reasonably priced subscription to Barron's. the current Barron's Gold Mining Index. Indexing market capitalization is the modern digital method. Investing is like following a soap opera. such as the past editors of Barron's. Laird has many of the historical data series I have compiled. For a very reasonable fee.com/chartstemp/FreeCharts. The demise of the Barron's Stock Averages and the Dow Jones 20 Bond Averages also says something about Barron's and Dow Jones too. the Barron's Stock Averages and the Dow Jones 20 Bond Averages lost their following long before Barron's and Dow Jones pulled the plug on Grandpa.wsj. It is also available online on a subscription basis.I believe these venerable.com/Gryphon/jsp/retentionController. I could not function without it. decades old market metrics based upon arithmetic averages were casualties of the digital information revolution. Barron's will mail its publication overseas to Asia. you can follow the markets like a serious student. or Barron's for any reason. The survival of the old Barron's Gold Stock Average. But pull the plug they did and 50 years of market history was cast aside and forgotten. or have any expectations that in the future I will be receiving financial payments from Mr. Barron's will provide you with current weekly data needed to maintain your weekly data set. I would not be surprised to learn that currently only a hand full of people have been seriously tracking the BGMI for the past few years. Both publications are authoritative publications of record for financial statistics. People interested in gaining access to this body of historical weekly closing price data should go to the below webpage. Mr. I want to say that I have not in the past. Personally. The new indexed measurements also come with open interest and volume figures. MR. I am providing a link to Mr. and I think a superior method. Sharelynx's data page www. says something of the attachment gold once had on people. Laird will sell you data. With all this.

have this appearance. This is a chart containing every data point Barron's has published on these two series from their first weekly published figures to the present. Barron's doesn't even know I exist. that spans this same period. For your information. Now back to the Barron's Gold Mining Index. So the XAU as seen below is actually four years from the BGMI top of October 1980. The next chart is a comparison between the BGMI and XAU. As a record of the gold mining industry over time. hidden within this period (1939 . The Dow Jones Industrial Average looks very similar. As we can see in charting the 67 years of the BGMI. The Federal Reserve's chronic increases in the total volume of the reserve currency it manages. Laird. gold and gold mining shares. 11 . Most market measurements valued in dollars. We really only see half of the whole picture. the first three decades contain no information in this chart.webpage for data hounds is a hobby for MR. This annoying effect of inflation. The BGMI appears to have been in a persistent vegetative state from 1939 to 1963.63) is a record of great importance for insight on the US Dollar. has over time created distortions in relative price values from one decade to the next. Why does this chart take on this appearance? It is solely due to the effects of monetary inflation on the paper US dollar's value. the XAU traded for about a year before being included as a statistic published in Barron's. creates a base line shift in the fundamental values of the American market's measurements over the decades. makes analyzing one decade of a market to another very difficult. we can see that the BGMI is far superior to the XAU. except maybe you. This gradual increase in the basic stock of money (CinC). Inflation's distortion to price valuations is another reason why historical data is not fully appreciated. As we will see below. No one is getting rich making this offer.

00 = 26-Dec-1938. But the results of my assumed value is almost twice that of the total value of the 1939 listing of the BGMI. a span of time that includes the operation of the London Gold Pool (1960 to 14-March-1968). Both numbers are based upon a 10% swing in the BGMI.75 in the 26-December-1938 issue of Barron's.87 point change. just as monetary inflation has caused a huge loss in value of the paper US dollar over time. Monetary inflation is why these decade long charts have assumed this appearance over time. A 10% swing in my assumed 1978 to 2006 average of 750 produces a 75 point change. indexed to 1. We can now easily see how many times the volume of paper US dollars in circulation increased over this same period.The first value listed for the BGMI was 48. I will assume 750 as an average value for the BGMI from 1978 to present. I have also included the plot for US Currency in Circulation (CinC). 12 . Let us look at the BGMI from 1939 to the end of 1968. A 10% swing in the 1939 value of 48.75 produces a 4.

Still. and air raid sirens were installed in every major US city. After the start of the Korean War in June 1950. Consider the following facts.Remember this chart the next time a financial expert expresses his opinion that gold mining shares are sensitive to massive inflation. but CinC inflation roared ahead. In this 3.5 year period. wars and political upheaval. This period corresponds with Hitler's obvious preparations to invade Poland to his actual invasion of the Soviet Union. the world's political structure and economy was torn apart. CinC slowly started to pick up again. some Americans were building bomb shelters to prepare for the coming Soviet "atomic" attacks. We don't see the BGMI doing anything significant after World War II until 1961. Here is a second shooting war with more inflationary acceleration of CinC. During the 1950s. That was over twenty years after 1938. Again. Current market logic expressed in the financial media would have these trends of the 1950s reversed. Let's blame this slight inflation on the Korean War. 3. for Britain and the United States (where these shares were traded). The BGMI did not respond to this fear. 13 . however the Dow Jones Industrials were having a very nice bull market all during the 1950s. Here is actual global chaos and massive inflation - yet the BGMI declined in value by more than -60%! This is not my opinion but an indisputable fact recorded in the BGMI. After June 1942. the issue of war turned favorable for the Allies. The darkest hours of World War II. here was another shooting war that had no discernable effect on the BGMI in the above chart. occurred from the very start of this chart until 24 June 1942. while the US CinC doubled. CinC fell slightly between the inter-war period of December 1945 to June 1950.5 years later in June 1942. the BGMI would not return to its December 1938 high until 1961.

Printing more paper US dollars than there were US gold dollars to back them would. Any time more buyers came into the London Gold Market than there were sellers. The paper US dollar became a wasting asset. understood that the US would never again return to a limited paper currency. printing paper US dollars in excess of its gold reserves was now the monetary policy of the United States. CinC continued to noticeably increased. it is pointless to pick a typical price. two things happened that the BGMI was very sensitive to. 2. As 1980 was a period of extreme volatility in both gold and the gold stocks. The BGMI started to increase in value as the paper US dollars increased in numbers. From 1933 to 1974. and gold US dollar left the United States. The London Gold Pool was formed. The world of money being realistic about such things. the shares in gold mining companies proved to be an effective American proxy for gold itself. Such purchasers would soon find that they would be met with massive selling of central bank gold. by the laws of supply and demand cause the price of gold to rise upwards in price from the official BWA's price of $35 an ounce. the pool would punish anyone who dared to purchase gold at a price above the official $35 dollars an ounce. To see the truth of this. or both. From the first day of The Pool's operations. This was a time when American citizens needed a license to hold gold or face imprisonment. 1. No doubt this increase in the BGMI was primarily from US investor demand. and then fall $180 in the week after that. one only has to go to a library that offers news papers of the 1950-60s and compare the advertised prices then and what we pay for similar items today.Everything changes with the Kennedy / Johnson presidencies. 14 . As $800 gold was but a fleeting moment in 1980. the world of money knew that the United States no longer intended to honor the Bretton Wood's Accords. After the start of President Kennedy's term of office. The London Gold Pool's purpose was to pool the resources of US friendly central banks. stiff financial penalties. I thought it appropriate to use a 20 year period from the first week in 1960 to the first week in 1980 in the table below. The London Gold Pool intended that over $35 an ounce gold purchases would be a losing proposition. From the first week in January 1980. For reasons good or bad. The world saw the creation of the London Gold Pool as the US Government's rejection of the Bretton Woods Monetary Accords (BWA). I chose not to use the highest prices for gold and the BGMI of 1980. (the basis date for the values I used in my below table) gold was to rise $220 dollars in the next two weeks. however now the US gold reserves noticeably decreased. Note on the table below.

The day the Bank of England withdrew from the London Gold Pool. when the inflation in CinC finally resulted in calls from foreign central banks upon the US gold reserves (1958 to 1968). by the end of this article all will be explained and understood. Who today is aware that the 1960s was a golden decade for the gold mining shares? Gold stock investors from 1960 to 1968 saw gains of over 1. It is most important to know that this 1968 BGMI bull market's top occurred less than a week before the Bank of England's announcement of its withdrawal from the London Gold Pool on 14 March 1968. The increase in gold prices triggered a BGMI crash of minus 60% over the next two years. I promise. was the day world changed. but there is logic to it. the BGMI entered a significant bull market. the BGMI was indifferent to CinC inflation. The two vertical dashed lines mark 15 . The next chart is a side by side comparison of the US gold reserves with the BGMI from December 1938 to January 1970. However.The BGMI record clearly shows that as long as the US could inflate CinC without having a corresponding decrease in the US Gold Reserves (1945-58). This seems confusing. gold was allowed to be traded freely for prices over $35 dollars an ounce. is that after the closing of the London Gold Pool. The following two charts are important in understanding the bullish price action of the gold shares in the 1960s.200% in eight years while gold itself was kept at $35 an ounce for the entire period! Another important point for gold shares in the 1960's.

and the Cold War that created constant US domestic fears of Soviet atomic attack upon the civilian population of the United States. the Korean War. but not a factor of this bull market in the BGMI. It was the gold share's reaction to the run on US gold and the existence of the London Gold Pool. As in the case with World War II. Please note that the Vietnam War was concurrent with. There can be no doubt why the 1958-68 BGMI bull market occurred. the Vietnam War was an incidental non-factor to the BGMI price action from 1960 to 1973. (See the below chart) 16 .the start of the run on US gold and the withdrawal of the Bank of England from the London Gold Pool.

can we assume that the US's involvement in Iraq is somehow buttressing the BGMI extremely strong performance since 9/11? Many experts' considered opinion may say that this is so. Of the four major wars the US has been involved in since 1939. If foreign armed conflicts produced no reaction to the BGMI. and elsewhere. (1939-68) a period that involved the US in World War II. but to assume this one must be unaware of the 67 years of BGMI history. on what basis can anyone claim that the gold mining shares are sensitive to war. One must wait some time before the digital XAU will be traded. Considering the gold mining shares market of today. three weeks after the closing of the London Gold Pool. the 1960's BGMI bull market coincided with the London Gold Pool. The anti-war riots and political upheavals peaked in the United States. The Korean War. The BGMI collapsed 60% during the anti-war chaos of the next two years. The BGMI was to crash by -60% in the next two years as the radical "Black Power" movement grew in influence. what about American domestic upheavals? The 1960's racial problems occurred during the 1958 to March 1968 BGMI bull market. Without a doubt. the BGMI's primary trend was completely indifferent to American's involvement in armed conflict. The Iraqi conflict is into its third year of combat operations. for the first three decades in the history of the BGMI. and seeing that the start of the current bull run of the BGMI closely matches that of the September 11. social unrest. the Cold War and The Vietnam War.As you can see above. however Martin Luther King was assassinated on 04-April-1968. there have been 17 . after the closing of the Gold Pool and the market top in the BGMI. or persistent American public fears of sudden death from domestic or international terror? The XAU is silent upon these years. the Iraqi conflict has seen the fewest human causalities to US troops abroad. 2001 (9/11) World Trade Center Terror Attack. * not * the Vietnam War. To date. In light of this data.

By the end of the current bull market in the BGMI.negligible consequences on the home front when compared to the other three major wars. it will be very clear that the factor supporting its bullish primary trend will be monetary inflation and nothing else. up to this point in time. The Iraqi War.net 18 . Mark J. has not been. World War II and Vietnam were traumatic events to the American public. Lundeen mlundeen2@comcast.