The Capital Gold Group:  Gold Historical Timeline Significant Events and the Price of Gold in the Last 50 Years

1961: The London Gold Pool was established; U.S. central banks and seven nations agreed

to buy and sell gold to support the $35 per troy ounce price established on January 31, 1934

1968: The London Gold Pool was discontinued; the two-tier gold price was established –

one tier was for official monetary transactions, the other for open-market transactions

1968: Zurich Gold Pool, a buying cartel created by key Swiss banks, is established, giving

Switzerland its dominant financial position in the market

1969: Gold Exchange of Singapore opens; serves as a very important link between Far

East countries and London

1971: U.S. President suspends convertibility of dollar into gold; dollar devalued by 7.9%

1973: Official U.S. gold price increased to $42.22 per/oz.; US dollar devalued; two-tier

gold price terminated; Organization of Petroleum Exporting Countries (OPEC) oil embargo

begins

1974: Hong Kong gold market booms; government restrictions on imports lifted

1975: U.S. citizens allowed to hold gold bullion and gold coins for the first time in 40 years

1978: Middle Eastern investors increase gold purchases with oil profits

1980: Gold price peaks at an historic daily high on January 21

1987: Birth of the London Bullion Market Association (LBMA) establishing criteria for refiners

and guaranteeing quality of gold bullion bars throughout the world

1989-1991: Conflict in Persian Gulf; collapse of Soviet Union marking end of Cold War;

weak economic growth worldwide

1997-1998: Central Banks of several countries sell large quantities of gold holdings to

meet currency criteria for Euro; East Asia suffers economic crisis

2000: China deregulates gold markets; Chinese citizens allowed to buy gold bullion

after 50 years of closed markets

2000: USA technology sector and “Dot-com” stock market crash

2001: USA “9-11” terrorist attacks in New York City; gold begins historic rise as

investors seek “safe haven” in physical gold

2002: China launches gold market, opening the Shanghai Gold Exchange

2003: Introduction of the Euro devalues the U.S. dollar on the international market; oil

prices hit $78/barrel; gold surpasses $350/oz.

2006: Barrick Gold and Newmont Mining predict gold reserves will be depleted in 10 years

at current production rates; gold prices surge 20% yearly since 2001 to over $650/oz.

2007: Dubai and Saudi oil producers announce major gold bullion purchases to be stored

in Dubai; China announces plan to increase gold bullion purchases with excess cash

reserves; Vietnam opens Ho Chi Minh Trading Center, Vietnam’s first gold exchange; Gold

demand outpaces supply

2007: China invites five world banks, including HSBC, Societe Generale, and Standard

Chartered to join the Shanghai Gold Exchange, opening the exchange to global trading

2008: Gold price breaks through $1,000 barrier in early 2008; China opens Shanghai

Futures Exchange placing additional demand on gold supply; oil prices surpass $100/barrel

milestone; gasoline hits all-time high in U.S.; U.S. crippled by financial crisis; U.S. Dollar hits

new lows

Since early civilizations, gold has been the ultimate symbol of beauty, wealth, immortality, and power in many cultures throughout the world. Even before it was used as money, people placed great value on gold. The rulers and elite of the world turned it into objects of worship and created shrines, idols, vessels of all types, and jewelry.

Today, as in ancient times, the intrinsic value of gold has the same universal appeal.  Gold’s beauty, scarcity, unique density, and the ease by which it could be melted, formed, and measured made it a natural trading medium. Gold gave rise to the concept of money itself: portable, private, and permanent. Gold (and silver) in standardized coins eventually replaced barter arrangements, and gold was first used as money around 560 B.C.

The United States began to use coins for commerce in the early 1800’s, which remained in circulation until 1933, when they were banned from being used as legal tender as an attempt to remedy

the perceived causes of the Great Depression. In Executive Order 6012 signed on April 5, 1933, President Franklin D. Roosevelt prohibited the “hoarding” of gold and limited any person from

owning more than five ounces. The government required holders of significant quantities of gold to sell their gold at the prevailing price of $20.67 per ounce. Shortly after this forced sale, the price

of gold from the treasury for international transactions was raised to $35 an ounce. The U.S. government thereby devalued the dollars (which it had just forced citizens to accept in exchange for

their gold) by 41% of its former value.

The confiscated coins and bullion were melted into bars and sent overseas to pay foreign debts, and it is estimated that only 1% of the coins in existence at that time survived the massive meltdown.

The government held the $35 per ounce price until August 15, 1971, when President Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed value, thus abandoning the gold standard.  The limitation on gold ownership in the U.S. was repealed after

President Gerald Ford signed a bill legalizing private ownership of gold coins, bars and certificates by an act of Congress which went into effect December 31, 1974.

The wait was finally over. Demand in the 1970’s paved the way to the current gold market, as fewer pre-1933 gold coins were available but investor demand began to surge. Since then, U.S. gold coins have dominated the world gold market. Their popularity is a result of the scarcity of these gold coins, and the potential return on investment they offer investors.

Bullion, the most widely traded type of gold, is commonly found in the form of coins. It is favored because of its affordability. The most popular bullion coins include the American Eagle, the Canadian

Maple Leaf, and the South African Krugerrand.  In the 1980’s, with greater and greater numbers of investors entering the coin market, industry leaders recognized the need for an extremely reliable form of protection for rare coin consumers.

Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC), the nation’s leading reputable third party grading services, were formed, bringing standardized coin

grading and guaranteed authenticity to the industry, creating a climate in which investors could participate in the coin market with greater confidence.

Today, investors recognize gold not only as a means for capital appreciation, but also as a way to secure their long term savings and retirement goals, and to diversify their portfolios away from strictly dollar-denominated assets in these uncertain economic times.

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Since 2001, the U.S. Dollar Index has decreased over 30%, and gold prices have increased over 300%.

At the turn of the century, gold prices were at their lowest levels of the last decade, and the stock market along with the U.S. Dollar Index, which reflects the dollar’s standing compared to the other major currencies of the world, were making new highs. 

The markets shifted in 2001, as the terrorist attacks of September 11th followed by massive government deficit spending propelled the dollar ever lower, and as investors sought the safety and protection of gold for their long-term savings and retirement plans.

Now the once mighty U.S. Dollar is no longer just making life more expensive for Americans, it is crashing on currency markets, and its clout is evaporating worldwide as foreign countries, businesses and individuals turn to other stronger currencies such as the euro.

The consensus of experts is that budget deficits, weak employment growth and unstable financial markets are likely to keep the U.S. dollar weak into the future, and that it will take years for the dollar to recover its value and prestige.

As the US dollar declines further, the upward momentum seen in the gold price is likely to continue.  For this reason, many investors today prefer to hold a portion of their investment portfolio in physical gold versus a portfolio held completely in dollar-denominated assets.

The Capital Gold Group - GOLD a n d  P r e c i o u s  M e t a l s  i n  Y o u r P O R T F O L I O

Asset Allocation Strategy

Successful investing today requires an understanding of the big picture with a clear long-term vision, both for individuals as well as institutional investors.

Maintaining long-term value and capital growth are the two most common investment goals. The average portfolio is invested primarily in traditional financial assets such as stocks, bonds, mutual funds, and real estate.

Adding tangible assets in physical gold to a portfolio increases the degree of diversification by introducing an entirely different asset class, providing greater protection from market risk. This protects the total portfolio against fluctuations in the value of any one type of asset.

For example, while U.S. large-cap stocks and international stocks move in the same direction a substantial percentage of the time, hard assets such as gold tend to move in the opposite direction providing a more balanced portfolio.

            Typical Portfolio Model                       Maximum Portfolio Diversification Model                                         

More investors than ever before are adding gold to their investment portfolios as a diversification strategy due to the fragile nature of paper investments and currencies. The expert consensus is that 5% - 30% of your total portfolio should be in gold for long term preservation and growth.

Whether you are unsure about the appropriate asset allocation percentage for your portfolio or just need help getting started, speak to Capital Gold Group Gold Specialist toll free at 1(800) 510-9594.

The Capital Gold Group - 21st Century Gold Rush 

Capital Gold Group, Inc. offers physical gold products that provide safety and security for your investment portfolio by acting as “Portfolio Insurance”. A quality asset, gold has proven its vital role in maintaining portfolio value and stability. An asset allocation in physical gold is the missing link in most portfolios today.

Gold Price Forecast

Since 2001, the price of gold has risen over 350%. Factors influencing the gold bull market include a continually weakening U.S. Dollar, inflation, volatile stock markets and global demand. Increased investment by U.S. pension funds and institutional investors has also had a phenomenal impact.

Merrill Lynch stated in its North American Precious Metals Weekly Report dated April 9, 2007, “This is a run that can be expected to last at least another five years and ultimately see bullion break the $1,500/oz. barrier.” According to the New York Times, Bloomberg Markets forecasts that “the price of gold will reach $3,000/oz. within the decade.”

Global Supply & Demand

Global demand for gold has never been higher, and according to the World Gold Council, is now outpacing supply. Demand factors include the legalization of private ownership of gold in China followed by the opening of the Shanghai Gold Exchange in 2002, when billions of Chinese consumers were able to purchase gold for the first time. Analysts predict that the rapidly rising purchasing power of Chinese consumers and the growing appetite for investment opportunities are expected to continue to push up the demand for gold. Adding further to gold demand, China’s gold futures made a strong debut on the Shanghai Futures Exchange on January 9, 2008, as international gold prices repeatedly hit new highs, driving the price of gold over $1,000.

In India, the world’s largest consumer of gold, 2007 annual investment demand was the highest on record, having more than doubled since 2004. Other countries hoarding gold include Russia, which has been storing massive surpluses derived from exporting natural resources in gold, and oil producing nations such as Saudi Arabia, Dubai and Qatar, all preserving their oil profits in gold.

In contrast, gold supply is at an all time low and may decline as much as 15% in the next five years due to lack of new production and minimal gold exploration in the past ten years.

Record demand for gold and dwindling supplies provide a solid basis for investment.