1979 was the year gold went from an inflation hedge to a panic asset. The Iranian Revolution toppled the Shah and triggered a second oil shock; inflation in the US ran into double digits; and at the end of December the Soviet Union invaded Afghanistan. Confidence in paper money evaporated.
Gold's ascent turned near-vertical, climbing nearly 60% on the year and setting up the blow-off top that would arrive in the first weeks of 1980. It was the mania phase of the great 1970s bull — and, as manias do, it was about to end violently.
Key events of 1979
- 1979-02-11
Iranian Revolution
The Shah falls; a second oil shock follows and Gulf supply fears spike.
- 1979-08-06
Volcker takes the Fed
Paul Volcker becomes Fed Chairman, soon to wage war on inflation.
- 1979-12-24
Soviet invasion of Afghanistan
Cold War tensions spike; gold accelerates into its blow-off top.