I'm trying to identify predictors of peak gold prices. Annualized changes in monthly CPI looks like a good one:
[img_assist|nid=1802|title=
Month End Gold vs. Annualized Change in Monthly CPI|desc=|link=node|align=left|width=466|height=311]
But, monthly charts of prices don't do gold justice. Look at this daily chart of gold over '78-'82:
[img_assist|nid=1803|title=
Daily gold over ’78-’82|desc=|link=node|align=left|width=466|height=311]
Look how quickly gold moved from mid 400s to mid 800s: one month!
Gold closed at $473 on Dec. 21, 1979.
The next trading day was Dec. 28, 1979, when it closed at $512.
It closed above $600 ($634) on Jan. 3, 1980.
It closed above $700 ($760) on Jan. 16.
It closed above $800 ($835) on Jan. 18.
It peaked (intraday) at $875 on Jan. 21, and closed at $850.
The move down was quick, but not as rapid: two months from mid 800s to back below $500.
It closed below $800 ($737.50) the next day, Jan. 22, 1980.
It closed below $700 ($695) the following day, Jan. 23.
It closed below $600 ($585) six weeks later, Mar. 10.
It closed below $500 ($484) on Mar. 17.
What caused the one month rocketing in price? I certainly don't remember (I was a senior in high school), but per this website, it appears that it may have been the Soviet invasion of Afghanistan:
I assume that folks moved to gold en masse due to the great uncertainty: horrible inflation in the U.S., onward march of communism, no confidence in the U.S. president. Weird, ugly times.
