Past Economic Shocks And Precious Metal Prices

Past Economic Shocks And Precious Metal Prices

The Great Depression Starting with perhaps the most famous economic event – The Great Depression. For many people, even those born many years later, the Great Depression is a familiar benchmark for economic disaster. The massive stock market crash of 1929 sent personal and corporate wealth into a violent and shocking freefall. Unemployment numbers rocketed out of control, and the US entered an almost 20-year economic downturn, only climbing out following the end of World War 2. There were a lot of reasons for the crash, with the Federal Reserve refusing to step in to shore up thousands of collapsing banks as a way of punishing them for wild spending, ultimately prolonging the disaster. Following the start of Great Depression was the New Deal, a controversial measure by President Roosevelt to repair the damage by having the government intervene to artificially stimulate the US economy. This is a decision that is still controversial today, with many people uncomfortable at increased governmental involvement in the markets.

The Nixon Shock

After World War 2 came the introduction of the Bretton Woods system. This was a system put in place by the United Nations to tie currencies to the precious metal prices – specifically to gold. This agreement came to an end in the early seventies under President Nixon, with actions designed to separate the US dollar from the fixed price of gold. In separating the dollar from precious metal prices, Nixon imposed a ninety day freeze on wages and import surcharges. With the US effectively abandoning the gold standard through President Nixon’s order, a shock wave was sent throughout the global economy as it became impossible for countries to attach their own currency to precious metal prices. This final nail for the gold standard brought far more instability globally.

The Great Recession

Moving ahead to more recent times, a significant event in the lifetime of any younger readers who may be researching precious metal prices, was the Great Recession of the 2000s. Beginning in the US in 2007, the longest recession since the Great Depression spread globally into 2009, causing major damage to some of the most reliable economies in the world. The Great Recession was caused by what is commonly referred to as the bursting of the US housing bubble. The first decade of the 21st century saw a boom in housing in the US, with banks lending more and more money, reducing the value of property and eventually leading to a situation where several major investment banks could no longer shore up the debt, causing them to collapse. Unlike during the Great Depression, this time the Federal Reserve was quick to act, once again pouring money into the economy in order to kick-start it again. While the earlier intervention avoided the same damage, many people still felt the familiar discomfort at the government’s financial involvement.

Precious Metal Prices and Economic Crisis

These are just three of many episodes in the history of the economy – both domestic and global – that have shaped our relationship with our money. Similar crises date back as far as 33 AD, showing that the systems in place have always been far from perfect. If you are looking into precious metal prices or considering investing in gold or silver, Home Stored Gold IRA is here to give you professional, trustworthy advice. Just these three examples show how shaky the economy can be, and there are many more – the stability of gold and silver investments can give you peace of mind where typical currency can’t. Contact Home Stored Gold IRA today.]]>

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