Name: I Analysed 100 Years of Gold Prices, This Is What I Found
Uploaded: 2025-07-18T19:05:39.000Z
Duration: 16 min 19 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

There is something strange happening with gold prices.

Present continuous

Over the last 12 months alone, they have risen by 41 percent.

That is something unheard of for gold prices.

In fact, the current monetary policy is emphasizing the fact that gold price is supposed to fall down since the federal reserve is shrinking its balance sheet.

So I tried to dig down into this topic and figure out what exactly is happening with gold prices.

Why are they rising so fast at levels that we haven't seen in a long time?

Or it's finally time for gold prices to collapse and fall down?

If you are ready, give this video a thumbs up and let's dive right into it. 25 years ago, gold prices were 279 dollars, and today they are around 3500 dollars.

That is almost an increase of a thousand and a hundred and twenty percent.

If you look at it, it seems like gold has been some of the best investments of the last 25 years.

Imagine you have two people, one person buys gold with a hundred thousand dollars, and the second person keeps it in the bank. 25 years later, this guy is sitting on a portfolio of a million dollars, while the second guy can barely buy anything with that hundred thousand dollars.

You could have bought a really decent house with a hundred thousand dollars 25 years ago.

All you can hope for is a down payment for a decent house.

But gold prices shouldn't rise at all, because gold is not the kind of asset that rises in value.

You see, we have two types of assets in the market.

We have active assets, and then we have passive assets.

An active asset is the kind of asset that produces something over time.

Now, a coffee shop doesn't sound as exciting as gold, because it's simply producing coffee, but it's producing something.

It is filling the demand in the market, but producing a hundred coffees a day, a thousand coffees a day, and it's making people's lives better.

It is giving value to people, which means that it is an active asset.

And active assets over the last 25 years have done much better than gold.

Apple, for example, it's impossible to imagine our life without apple today.

Can you imagine your life without smartphones, macbooks, ipads, app store, and apple music?

For most people, they became the fundamental part of their lives.

And apple stock over the last or the same period of gold has grown by 32 thousand percentages, which makes it a far better investment than gold.

Amazon is another example, but they have exceeded anybody's expectations by growing by 300 thousand percentages.

Just imagine a thousand-dollar investment into Amazon 25 years ago.

That thousand dollars probably today would worth over a million dollars.

That's probably one of the greatest investments you can possibly imagine.

But Amazon has done something that most people cannot possibly do.

This private company suddenly owns dozens of huge planes, they own thousands of vans, and they made overnight delivery possible, something that was literally impossible even to imagine 25 years ago.

Which is why these assets grow tremendously fast, since they are producing real value to the market.

However, when we look at a passive asset such as gold, it produces nothing.

Gold is sitting there in the corner and it shines.

That is all that gold can do, nothing more than that.

Which means that it is not consistently producing any kind of value for it to grow in value.

Which means that given the circumstances, the gold that you had for example 20 years ago is the exact same gold that you have today.

It didn't multiply, it didn't grow, that gold didn't make more gold.

In fact, the supply of gold rises by 1.5 percent annually, which means that it is a very rare resource.

And that's exactly what makes it more valuable.

That's exactly why gold preserved its value over the last thousands of years.

If you pay a close attention to the price of gold, you will see a very clear pattern.

Back in 1970, the price of gold was 34 dollars.

This is the kind of price that people cannot possibly imagine.

If gold prices today would be 34 dollars, most of you would rush to buy all the gold in the world.

But we no longer gonna have those kind of prices.

But what is interesting here is that there are sudden spikes in the history of price of gold.

For example, this is the first spike when gold prices tripled or grew like 5 times in a very short period of time.

And that's because the United States untouched the dollar from gold.

Back in the 1970s and 80s, when the United States was going through some of the highest inflation in its history, gold prices rose again.

When the dollar loses its value, gold prices rise because in relation to the dollar, gold has actually grown, since gold is limited in supply, but the dollar can be printed by the Federal Reserve of the United States.

And then there is a very long period of time when the United States was the only dominant power in the world.

Nobody could challenge the United States.

Which means that now dollar is as valuable as gold, which is why gold prices began to fall after that.

The first spike was in 2012 and 2013 when it reached all-time high and the second spike was in 2020.

So historically, by looking at this graph, you see that gold has been some of the best investments somebody could possibly make.

It has grown by 10,000% over this period of time.

And because the United States is the largest holder of gold in the world, I guess nobody made from the rise of price of gold more than the government of the United States that holds so much gold in the world that probably that is literally a third of the global supply of gold.

Anyways, what's interesting here is that something fundamentally changed in early 2000s that gold prices after that skyrocketed.

Yes, gold prices spiked prior to that, but this growth is nothing compared to the growth that we see over here.

And to understand what's happening over here is that you simply have to take a look at the balance sheet of the Fed.

Now, a lot of people don't understand the importance of the 2008 financial crisis.

To a lot of people, it simply was just another crisis.

However, the 2008 financial crisis was so fundamentally important that it restructured the entire financial system of the world.

It was to the magnitude of detaching the dollar from the gold.

Before the 2008 financial crisis, the Federal Reserve would not intervene in the economy by printing so much money.

And that's why you see that the balance sheet of the Fed was very stable at around 800 billion dollars.

It was probably 770 billion dollars, slightly less than that, but it doesn't matter.

And every time we had high inflation, the Federal Reserve would step in, hike interest rates to bring down inflation.

It wouldn't instantly work, but that was basically the main job of the Fed.

Yes, it also wanted to achieve maximum employment.

But that second goal was the second goal.

The primary goal is that we are going to keep inflation or interest rates as high as possible to bring down inflation.

And then 2008 happens, and the entire economy crashes.

And people freaked out to the point that, literally, back in the days, everybody thought that this is the end of the United States.

Because you saw house prices going down and down and down.

And if you would do the basic math, you would realize that it's simply mathematically about time that house prices would go to zero, and then they would go to negative, and the US GDP would literally just go to zero.

That was basically the basic understanding.

So the Federal Reserve takes a very important decision to start printing money to save the  economy, and the balance sheet of the Fed triples overnight.

In a couple of years, the balance sheet of the Fed simply triples.

Because the kind of money that the Fed injected into the economy, that's something that most people at that time could not even comprehend.

And that's why you see a very close correlation between the Federal Reserve increasing its balance sheet and gold prices rising dramatically.

The Fed kept rising its balance sheet up until 2014.

In fact, by 2013 or by 2014, the Fed signaled to the world that no more printing money and we are going to stop at this point.

In fact, we will try to get rid of all of these securities that we have purchased and we will take most of this money that we have printed out of the economy.

That sent a very positive message to the world and that's why gold prices after that began to drop.

If you pay close attention, gold prices even began to fall for a very long time.

And that correlates with the balance sheet of the Fed when they started in 2018 to shrink their balance sheet.

However, here is the most interesting part.

In 2020, we know what happened exactly, it literally just changed everything, and the Fed was forced again to do exactly the same thing that they did back in 2008.

And the balance sheet of the Fed grew from 3.8 trillion dollars up to 9 trillion dollars at its peak, which led to the rise of gold prices from around 1500 dollars or even I would say it was like 1300 dollars to as high as 3500 dollars.