If you think silver is headed to new all-time highs in this cycle…
Or you believe gold is going to mid four-figures or even five figures…
Then many people might think you’re a kook…
I’ve certainly been called that at times.
But here’s the thing—kooks like us have been right before.
When gold was in the low $100s in the mid-1970s, some made the “outlandish” prediction that it would hit $500. And were promptly labeled a kook.
Ditto for silver…
Some had the audacity to forecast $40 silver—when it was in the low $4-range in 1976.
“Those guys are nothing but kooks” was a common refrain from the mainstream at the time, as you’ll see.
And consider what was happening to gold and silver back then… prices were locked in a downward spiral for most of 1975—and then cratered even more in 1976. They just couldn’t seem to catch a break. There were numerous catalysts many thought would push them higher, but the downtrend wore on and on, pushing many investors to give up.
Sound familiar?
As you’re about to see, there were plenty of negative sentiment about gold and silver then—all of which proved horribly wrong not long afterward.
I really wanted to know what investors and the media were saying about gold and silver at the time, so I enlisted the help of two local librarians, along with my nephew, to dig up some quotes from 1976.
Here is what we found scrolling through the old spools of microfiche...
Gold and Silver Are Dead!
The public statements listed below were all made in 1976. I put the comments in a price chart, pinpointing the date they were said relative to the price. You’ll also see I can’t resist making some snarky comments of my own.
I’ll show you later what happened to the gold and silver price, and just how embarrassingly wrong these people were—and how right the kooks were…
[1] “For the moment at least, the party seems to be over for gold and silver.” New York Times, March 26.
Dear New York Times: Parties never last long; fundamentals do.
[2] “Though happily out of the precious metal, Mr. Heim is no more bullish on the present state of the stock market than any of the unreconstructed gold bugs he's had so much fun twitting of late. He's urging his clients to put their money into Treasury bills.” New York Times, March 26.
I bet a lot of Mr. Heim’s clients weren’t too happy with him when gold rose over six-fold by January 1980, while the US dollar—which underpins the value of Treasury bills—lost a whopping 26.2% of its purchasing power in the same period!
[3] “'It's a seller's market. No one is buying gold,' a dealer in Zurich said.” New York Times, July 20.
Sounds familiar. But so what? To be a successful investor means to look at the horizon and invest for what’s likely ahead, not what’s popular at the moment.
[4] “Though the price recovered to $111 by week's end, that is still a dismal figure for gold bugs, who not long ago were forecasting prices of $300 or more.” Time magazine, August 2.
Turns out those $300 price forecasts by the gold bugs were TOO LOW. Gold would hit $850 in less than four years.
[5] “Meanwhile, the economic conditions that triggered the gold boom of 1973 through 1974, have largely disappeared. The dollar is steady, world inflation rates have come down, and the general panic set off by the oil crisis has abated. All those trends reduce the distrust of paper money that moves many speculators to put their funds in gold.” Time magazine, August 2.
How short-sighted can you get? The symptoms may have eased, but the root causes were still present, as gold and silver prices would later prove.
[6] “Our own predictions are that gold will go below $100, with some hesitation possible at the $100 level.” As stated by Mr. Heim in the August 19 New York Times.
Oops! Gold never fell below $100, so if you listened to Mr. Heim, or even just waited to buy until gold did fall below $100, you never got the chance to buy, or else paid a lot more. This is the same Mr. Heim as #2 above; I wonder how many clients he had left by 1980?
[7] “Currently, Mr. LaLoggia has this to say: ‘There is simply nothing in the economic picture today to cause a rush into gold. The technical damage caused by the decline is enormous and it cannot be erased quickly. Avoid gold and gold stocks.’” New York Times, August 19.
You can see Mr. LaLoggia’s comments were made within days of the bottom! Investors should’ve done the exact opposite of what he recommended, and if they did they would’ve cleaned up.
[8] “'Gold was an inflation hedge in the early 1970s,' the Citibank letter says. ‘But money is now a gold-price hedge.'” New York Times, August 29.
Are they serious? Sounds like Citibank employees needed to learn the definition of money. This reminds me of some of the stupid comments we’ve heard today, like the guy that called gold a “pet rock” (and I’ll point out gold has risen 52% since he made that asinine comment).
[9] “Private American purchases of gold, once this was legalized at the end of 1974, never materialized on a large scale. If the gold bugs have indeed been routed, special responsibilities fall on the victorious dollar.” New York Times, August 29.
Spit my coffee out and call me crazy… not only was gold on the cusp of setting records for demand, the “victorious” dollar has lost an incredible 79% of its purchasing power since this comment was made!
[10] “Some experts, with good records in gold trading, declare it is still too early to buy bullion.” New York Times, September 12.
I guess they don’t understand the concept of contrarian investing. If instead of listening to the “experts” investors did buy gold, they would’ve watched their position rise 635% by January 1980.
[11] “Wall Street's biggest brokerage houses, after having scorned gold investments during the bargain days of the late 1960s and early 1970s, made a great display of arriving late at the party.” New York Times, September 12.
Another example of investors arriving late to a bull market. Should we thank the investors today, the ones that will push prices higher when they finally rush to buy gold and silver?
[12] “He believes the price of bullion is headed below $100 an ounce. 'Who wants to put money over there now?'” Lawrence Helm, New York Times, September 12.
Gong! Not only did gold never fall below $100, but if you did “put your money there” you could’ve changed your financial standing.
[13] Author Elliot Janeway, whose book jacket states, ‘Presidents listen to him,’ was asked by a book reviewer about his preferred investments. He writes: “Then, gold and silver? He likes neither. In fact he writes: 'Any argument against putting your trust in gold, and backing it up with money, goes double for silver: silver is fool's gold.'” New York Times, November 21.
This was my favorite quote, from someone who was extremely popular in the day. I hope presidents didn’t listen to Mr. Janeway, because he ate his words big-time: from the date of his comments to silver's peak of $50 in January 1980, silver rose a whopping 1,055%.
[14] “Mr. Holt admits that in 1974, intense speculation caused the gold price to get too far ahead of itself.'” New York Times, December 19.
This reminds me of Harry Dent’s claims, that gold would fall to as low as $250. I got so tired of his claims that I bet him—I’ll give you three guesses who won.
What It Looks Like to Eat Crow
All of these comments ended up being dead wrong. How wrong?
Let’s pan out a few years and see what happened to gold and silver prices after these comments were made.
The kooks were indeed right. Those that called for higher prices—higher than what most mainstream investors would believe—were proven correct. Some projections were too low (and to be fair, some projections were higher than what they ultimately hit).
This doesn’t necessarily guarantee we’ll be right today, but we do have a very similar setup: overwhelming fundamentals, with most in the mainstream not yet invested in the monetary metals. They don’t seem to fully grasp—or want to grasp—what can happen when there’s a rush into gold and silver. Yet the history lesson is here for all to see.
The problems of the day hadn’t fully played out. Those investors assumed the concerns at that time had largely dissipated. Just like today.
So, are you a kook, like those in the mid-1970s? One who thinks silver could hit new all-time highs and gold could rise to mid four-figures or higher? History says you just may just be proven correct.
My advice is hold on and make sure you’re prepared for the next big run. Our current circumstances—just like back then—demand higher silver and gold prices. Regardless of what the top may eventually look like, patience won in the end and will again today.
- Don’t listen to people who are unfamiliar with the gold market, or want to see their name in the headlines, or have a deep-seated belief that central bankers and politicians will save the day.
I’ll leave you with one last quote, one the next generation can read a few decades from now:
- “Buy gold and silver. They’re going a lot higher.” Jeff Clark, GoldSilver.com, November 1, 2021.
About Jeff Clark
An active investor with a love of writing, Jeff Clark is a globally recognized authority on precious metals. As the son of an award-winning gold panner, with family-owned mining claims in California, Arizona, and Nevada, Jeff has deep roots in the industry. Jeff regularly speaks at precious metals conferences, serves on the board at Strategic Wealth Preservation in Grand Cayman, and provides exclusive analysis and market commentary to GoldSilver customers. Follow Jeff on Twitter @TheGoldAdvisor