You may be surprised to learn that the leading investment across the 1970s was not stocks, bonds, real estate, or traditional investments– it was gold that soared 2,300%. Driven by a War with Iran, record high oil prices, and roaring inflation, gold soared from $35 to top $850 an ounce in January 1980.
A series of negative events combined in the ’70s to turn the investment world upside down and transform the mindset of investors for decades to come. An unpopular war in a far-off country became a costly political disaster. The President’s approval ratings fell below 30%. The President and Vice President were forced from office. Americans watched helplessly as Muslim fundamentalists in Iran held our hostages in the U.S. Embassy for 444 days.
In the ‘70s, politicians were indicted as crooks and thrown out of office. As gas prices skyrocketed, Americans lost confidence in their government, the economy, and the stock market. The U.S. Dollar tanked, bond prices fell, and U.S. unemployment topped 8.5%. By December of 1980, high oil prices rippled through the U.S. economy causing hyperinflation and recessions. After the Federal Reserve raised prime interest rates to 21.5%, gold topped $850. Through it all, gold prospered and soared 2,300%. Lately, news headlines remind us of those from the 1970’s.
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The Coming Replay of the 1970’s Gold Boom?
Today, we’re bogged down in an inflation after a pandemic, the President has historically low approval ratings, politicians are getting jailed, oil prices are hitting all-time highs, and inflation is ripping through the economy. Meanwhile, today’s stock market is depressed by the longest streak of Federal Reserve interest rate hikes since the ’70s– with more to come. Baby boomers nearing retirement face both low interest rates and the highest risks in stocks we’ve seen in decades.
Although we know how to lower inflation, we can’t do it right now. In the 1970s, it was really hard for central banks to raise interest rates enough to control inflation. This reminds us that lowering inflation is also difficult. In the past, it took three important people to make it happen: a smart strategist at the Fed, a brave Fed chairman, and a patient president. It was a tough time. Interest rates went up a lot, and there was a short recession. Many countries had problems, and the big banks almost went bankrupt. This was all when there was much less debt than there is now.
If inflation comes back, and people expect it to stay for a while, while unemployment is still high and there is a lot of debt, it may not be possible for central banks to raise interest rates enough to control inflation. The central bank’s independence is up to the government, and in some countries, there could be riots if they try to control inflation by raising rates.
Today, history may be repeating itself. One crisis after another has been chipping away at investor confidence– the stock crash of 2000 and 2008, the 9/11 terrorist attacks, the War in Ukraine, the nuclear confrontation with Russia, and a crazed dictator in North Korea firing off rockets.
It takes a long time for investment sentiment to turn against paper assets.
However, when optimism turns to extreme pessimism, fear of loss takes over quickly. As the race is on to avoid losses, investors turn defensive and buy gold and silver to hedge against a crisis, high inflation, a falling Dollar, or a stock market crash.
Back in the ’70s, investors turned to gold and silver for safety, security, and better returns. As they did, gold rose 2,300% and silver soared 2,400%.
Precious Metals Love Uncertainty.
In today’s hostile investment environment for stock and bonds, gold prices are up 224% from the low to recent high. Likewise, silver is up 268% from low to high. That’s impressive indeed. Yet, we feel these early profits forecast the coming of a Mega-Trend.
There’s no all-out rush to precious metals yet. But, when it arrives, gains of 2,300% for gold become a real possibility.
We continue to believe that the best is yet to come. If we’re right, then many golds rich millionaires and affluent silver investors can still be created along the way. Unfortunately, many who miss the early Mega-Trend signals may risk losing a lot of their hard-earned savings.
That’s why it’s important to read all of this month’s “Austin Report” carefully, consider all the facts, and digest the potential risks and rewards for yourself. The few minutes you spend today researching the risks and rewards could pay off handsomely in the years to come. Read on as this report continues.
How Did We Get Here Anyway?
To understand why gold and silver are enjoying such success year after year, let’s review how we got here. Back in the mid-1990s, millions of baby boomers began to plan for retirement. Most moved their CD’s into the stock market. It made sense. The first boomers were 10 to 15 years from retirement. They could afford the risk of stocks in exchange for better returns than CD’s or bonds. As a result, an unprecedented influx of trillions of dollars moved into the U.S. stock market. As a result, just about anyone could pick stocks that made 10% to 20% annual gains.
As always, money attracts money until a huge stock bubble inflated. Many people borrowed money with second mortgages to buy dot com stocks. Others took out loans on their credit cards to buy stocks. Millions of people put their faith completely in technology and internet stocks to make them rich. Millions of people kept all their life savings in stocks believing that stocks were infallible and a “no lose” investment. They were proven dead wrong as the stock bubble burst.
Microsoft and Dell had roared to over $60 a share, Intel topped $75, Yahoo traded at $475. American’s retirement plans became based on the future of high tech, computer, and internet stocks. Sure, some people made a pile of money and sold out. Sadly, most people believed the myth that the stock market would go up forever and held on during the crash.
High Tech Stocks Still Falling.
Suddenly, without warning, the high tech “dot-com stock bubble” began to burst in 2000. NASDAQ’s high-tech dreams and the internet crazes ended in a long, hard crash that is still going down six years later. Worldcom, Enron, Pets.com, Etoys.com, and DrKoop.com all went bankrupt, their stocks became worthless, and investors lost everything.
But stock declines are not over yet! Recently, MSFT and DELL stocks that once traded in the $60’s were in the low $20’s, Intel at $18, a third of their peak value. Yahoo trades under $32. No matter how hard stocks try to recover, there will never again be a fresh supply of baby boomer money to inflate prices again.
Sadly, trillions of dollars of paper wealth disappeared from retirement accounts since the 2000 crash. Countless people we know were forced out of retirement and back to work because they failed to properly balance and diversify their portfolios with a core holding of gold and silver. Many are still losing money in stocks today and can’t understand why.
Unfortunately, people who don’t know history are often doomed to failure. In fact, this was not the first technology-inspired stock boom, bubble, and bust. It happened to railroads in the 1840s and radio in the 1920s. You may recall that the Roaring ‘20s stock bubble ended in an economic bust we call The Great Depression.
Why Can’t We See the Future Coming?
The problem with investment cycles is that they are long 10-to-15-year events. By the time they return again, most people have forgotten about them. That’s why we’re writing today about the 1970s Bull Market for precious metals.
In the ’70s, Gold soared to 23 times its value as a $50,000 investment in gold made millionaires.
Today, we believe we are again in a Mega-Trend Bull Market for precious metals. Gold has averaged an annual gain of 24.6% over the last five years. Silver’s averaged 29.2% annual returns. Precious metals have continuously beat all major stock market indexes since the stock crash of 2000, yet that fact is not widely known, at least not yet.
Precious Metals Have Profit Power.
We can’t imagine why anyone would doubt the profit power of precious metals, unless they don’t know the facts. In our opinion, many factors that drove up gold and silver in the ’70s are back again. Today, we live in a climate of high oil prices, energy driven inflation, floundering stocks, rising interest rates, an Ukraine / Russia war, plus Iran and North Korea as nuclear threats.
We feel that stocks, bonds, and real estate are in the highest risk
position we’ve seen since the 1970s. No wonder Gold bounced out of a 20-year bear market with a vengeance! From a $258 low in 2001 to a recent high of $2011, gold has nearly decupled in value. But still, gold remains in a stealth market that most people have not yet discovered. That’s because by and large Americans are an optimistic bunch. It takes a long time for sentiment to turn negative. Yet, we’re convinced that it’s only a matter of time till more and more investors make the flight to safety in gold.
A Repeat of the Bull Market of the ’70s?
Keep in mind the theme of this report: History has a strange way of repeating itself. While gold and silver have been doing great since the 2000 stock crash, we feel precious metals will prove to be even more rewarding in the years ahead– especially when we compare present day factors to those of the bull market run of the 1970s.
• Back then, the Vietnam War was the quagmire. Politicians couldn’t get us out. Today, we’ve already spent more money in Iraq than on the entire Vietnam War and the price tag goes up $10 billion a month.
• The first Islamic fundamentalist attack occurred in 1979 when Iranians seized the U.S. Embassy in Tehran and held Americans hostage. Today, Iran is threatening to build nuclear weapons and hold the world hostage.
• Back then, the Russian Cold War was with us. Today, we have a crazed dictator in North Korea firing off missiles capable of holding nuclear weapons and aimed toward the western United States.
• In addition, today we’re spending a fortune fighting terrorists. 9/11 was a wakeup call that thousands of lives and billions of dollars’ worth of real estate can be wiped out in a few minutes. One terrorist attack on the U.S. tomorrow could bring the U.S. stock market to a screeching halt. No one could imagine a threat like that in the ‘70s.
• In 1979, we had a relatively small national debt of $845 Billion. Today, the Comptroller General of the United States reports the gross debt, plus the federal government’s fiscal exposure, totals $46 Trillion Dollars. That’s $156,000 of debt for every man, woman, and child in America. Next time we won’t be able to borrow our way out of a crisis.
The financial risks that we all face today are huge and seem to be getting worse all the time. We believe the greatest risk comes from the massive, growing U.S. debt and the lack of fiscal leadership today. Just since the early stages of the latest gold bull market began in 2000, the Federal Debt has soared from $20 Trillion to over $46 Trillion.
There’s no way to know what exactly could trigger the next financial crisis– a terrorist attack on America, a nuclear event, Iraq, Iran, or North Korea. In today’s geopolitical environment, is it any wonder that gold is up 224% in recent years? The implications of history repeating itself– but being far worse this time – are quite obvious to us.
If we have a repeat of the bull market of the ‘70s, gold has the potential to rise for 12-years by 2,300%. That would project gold to top $5,900 per ounce.