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Cost of gold the year you were born

  • 1960: $40 per ounce

    - Average close price: $35.27 (+0.5% compared to previous year)
    --- Inflation adjusted: $306.77 (-1.2%)
    - U.S. primary gold production: 51.8 metric tons (4.4% of world total)
    - U.S. secondary gold production: data not available
    - U.S. gold net exports: -289 metric tons (1 tons exported and 290 tons imported)

    In 1960, the inevitable happened—the free market price of gold broke through the $35 mark and for the first time, topped $40 an ounce. World leaders had to act, and the actions they took would prove one of the biggest disasters in global gold policy.

  • 1961: The London Gold Pool

    - Average close price: $35.25 (-0.1% compared to previous year)
    --- Inflation adjusted: $303.52 (-1.1%)
    - U.S. primary gold production: 48.2 metric tons (3.9% of world total)
    - U.S. secondary gold production: data not available
    - U.S. gold net exports: 639 metric tons (689 tons exported and 50 tons imported)

    In response to the 1960 $40 crisis, world leaders created a massive, independent stockpile of gold, to be held at the Bank of England, to defend the longstanding $35 pricing structure. It was called the London Gold Pool, a creation that world economic leaders would soon come to regret. It contained 240 tons of gold, half of which came from the U.S., with Germany, the United Kingdom, France, Italy, Belgium, the Netherlands, and Switzerland contributing the rest.

  • 1962: Swap line

    - Average close price: $35.23 (-0.1% compared to previous year)
    --- Inflation adjusted: $300.33 (-1.0%)
    - U.S. primary gold production: 48 metric tons (3.7% of world total)
    - U.S. secondary gold production: data not available
    - U.S. gold net exports: 205 metric tons (339 tons exported and 134 tons imported)

    In 1962, the Federal Reserve established its very first swap line with the Bank of France. By the end of the year, the Fed would establish similar lines with eight other key nations. These lines provided $900 million in foreign exchange.

  • 1963: Mining bosses pressure Washington

    - Average close price: $35.09 (-0.4% compared to previous year)
    --- Inflation adjusted: $295.23 (-1.7%)
    - U.S. primary gold production: 45.2 metric tons (3.4% of world total)
    - U.S. secondary gold production: data not available
    - U.S. gold net exports: 141 metric tons (181 tons exported and 40 tons imported)

    By the early 1960s, depleted gold mines made gold harder and more expensive to extract, yet the price of gold had been fixed at $35 an ounce since the Bretton Woods Agreement. Powerful mining interests and their political representatives lobbied hard for a price hike, but the president—first Kennedy, then Johnson—couldn’t or wouldn’t approve it. In the end, they met in the middle. The federal government agreed to spend tens of millions of dollars on one of the oddest and most secretive initiatives in the history of American gold policy: Operation Goldfinger.

  • 1964: Operation Goldfinger

    - Average close price: $35.10 (+0.0% compared to previous year)
    --- Inflation adjusted: $291.50 (-1.3%)
    - U.S. primary gold production: 45.3 metric tons (3.3% of world total)
    - U.S. secondary gold production: 16.1 metric tons
    - U.S. gold net exports: 340 metric tons (376 tons exported and 36 tons imported)

    Not only were mining bosses unhappy, but the Kennedy and Johnson administrations were obsessed with stockpiling more gold to be converted to U.S. dollars as the basis of the ever-expanding global economy. Unfortunately, there simply wasn’t enough gold to go around. Operation Goldfinger comprised hundreds of secretly funded research projects designed to wring gold out of the most obscure of sources, including marsh plants, deer antlers, coal ash, Colorado peat, meteorites, and seawater. The projects considered nuclear detonation to extract gold from the ground, powerful X-ray machines attached to trucks, and the use of particle accelerators to convert base metals into gold.

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  • 1965: U.S. London Gold Pool losses top $3 billion

    - Average close price: $35.12 (+0.1% compared to previous year)
    --- Inflation adjusted: $287.04 (-1.5%)
    - U.S. primary gold production: 53 metric tons (3.7% of world total)
    - U.S. secondary gold production: 18 metric tons
    - U.S. gold net exports: 1,050 metric tons (1,140 tons exported and 90 tons imported)

    The massive horde at the London Gold Pool kept prices below $35, but not for long. By 1965, inflation in U.S. currency, partially due to Vietnam War funding, caused the United States to lose $3 billion to the financial black hole that was the London Gold Pool. The entire 240 tons were worth only $270 million four years before.

  • 1966: The pool runs dry

    - Average close price: $35.13 (+0.0% compared to previous year)
    --- Inflation adjusted: $279.14 (-2.8%)
    - U.S. primary gold production: 56.1 metric tons (3.9% of world total)
    - U.S. secondary gold production: 21.2 metric tons
    - U.S. gold net exports: 369 metric tons (406 tons exported and 37 tons imported)

    After just five years, the idea that eight countries could artificially hold the global price of gold below $35 an ounce forever seemed almost comical. The following year, France became the first country to withdraw from the London Gold Pool, triggering a mad scramble among member nations to redeem their U.S. dollars for gold.

  • 1967: South Africa introduces the Krugerrand

    - Average close price: $34.95 (-0.5% compared to previous year)
    --- Inflation adjusted: $269.40 (-3.5%)
    - U.S. primary gold production: 49.3 metric tons (3.5% of world total)
    - U.S. secondary gold production: 25.3 metric tons
    - U.S. gold net exports: 864 metric tons (893 tons exported and 29 tons imported)

    In 1967, South Africa—with its rich gold mines—minted 50,065 one-ounce gold alloy coins with a purity of .917 (91.7%). These were called Krugerrands, and they would soon become the standard-bearer of the global gold bullion coin trade. By 1974, South Africa would mint nearly 3.2 million Krugerrands a year.

  • 1968: London Gold Pool collapses

    - Average close price: $38.69 (+10.7% compared to previous year)
    --- Inflation adjusted: $286.23 (+6.2%)
    - U.S. primary gold production: 46 metric tons (3.2% of world total)
    - U.S. secondary gold production: 28 metric tons
    - U.S. gold net exports: 560 metric tons (745 tons exported and 185 tons imported)

    In 1968, Congress repealed the requirement for the U.S. Treasury to maintain a gold reserve to back the U.S. dollar, and the London Gold Pool collapsed. Gold prices soared as demand increased, and the U.S. responded by increasing inflation of the money supply. An ocean of dollars flooded the U.S. Treasury, causing gold reserves to plummet to their lowest levels since 1938 as the value of the dollar was sent into free fall.

  • 1969: Heap leaching begins in Nevada

    - Average close price: $41.09 (+6.2% compared to previous year)
    --- Inflation adjusted: $288.25 (+0.7%)
    - U.S. primary gold production: 53.9 metric tons (3.7% of world total)
    - U.S. secondary gold production: 28 metric tons
    - U.S. gold net exports: -172 metric tons (11 tons exported and 182 tons imported)

    In America’s rapidly depleting Western gold mines, a radical new process called heap leaching allowed gold to be processed from low-grade materials and even mine waste. As part of the technological and chemical mining advances that began in 1952, heap leaching allowed mining companies to extract gold from even the shoddiest materials—but at a terrible cost to the environment.

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