Gold’s on a tear, but don’t let emotions get better of you

Past boom in late 1970s and early 1980 shows gains can be sharp, but the quiet can last longer

- Shefali Ananc

Consider this global scenario: uncertainty reigns.

With fears of high inflation and a possible US recession, the dominance ofthe dollar is being questioned. Sounds familiar? It mirrors the late 1970s during the oil crisis. In other words— we've seen this movie before.

Back then, investors flocked to gold asa safe haven. Prices nearly quadrupled, peaking at $850 an ounce in January 1980, according to the LBMA, formerly the London Bullion Market Association. Mining operations expanded, the wealthy opened gold accounts in London and Zurich, and some individuals even sold fixed deposits to invest in coins and bars.

But the boom didn't last. Prices fell to $500 an ounce and lower, and for the next 25 years, gold remained largely in arange.

Why history matters

This sequence is worth rememberingas gold hassurged around 50% this year. Past booms show that while many double down on gold, not everyone profits. Behavioral biases—like greed and herd mentality—often drive investors into rallies, sometimes harming long-term portfolios.

Unlike stocks, which have underlying businesses influencing prices, gold moves mostly on sentiment.

And thisislargely because the supply of gold is limited. Ifyou add up all the world’s gold coins, barsand jewellery, it amounts to 2,16,265 tonnes—just enough to make a seven-story building, about 70 feet tall, wide and deep, according to the World Gold Council.

Now, if suddenly millions of large and small investors all want to owna piece of this building, pricesare bound to go up—at least until another investment catches their fancy.

Where are gold prices headed?