The current and third gold bull market – since President Nixon ended the US dollar’s ties to a fixed gold price in August 1971 – continues and is dragging the other precious metals along with it. At the time of writing, the gold price is up 48% year-to-date in 2025, silver 64% and platinum 78%.
The first gold bull market from 1968 to early 1980 remains an epic one with the gold price having risen from a low of $35 an ounce in early 1968 to briefly $835 an ounce in early 1980, a 24-fold increase. The first chart is a semi-log chart of the gold price from 1968 to 2025. A semi-log chart better highlights the proportional movements in the gold price at every stage along the way.
Those stellar gains reflected two dynamics. The first was the deep undervaluation of gold as an asset by early 1968 as a direct consequence of the US Government’s decision to fix the gold/dollar exchange rate in 1934.
Inflation over the subsequent 34 years left the gold price at a 60% discount to where it should have been relative to that recorded inflation. That discount alone justified a 150% catch-up rally in the gold price once Nixon cut the dollar’s ties to gold.
Concerns about the US Government’s fiscal spending (during the Vietnam War) and the Federal Reserve’s lack of success in controlling inflation, which averaged 7% per annum in the 1970s, led to institutional and retail investor buying that drove the rest of that gold bull market.
However, by early-1980 the gold price had shot far above the level that could have been justified by inflationary trends alone. In addition, from just 2 times the average US House Price Index level in early 1968, the gold price peaked at nearly 14 times that same index value by early 1980 (see second chart).
Note: There are many assets that one could compare gold to for valuation purposes like the S&P 500 Index, US House prices and other commodities. Our preference is to compare the gold price to the US Average House Price Index because both are pure dollar assets and neither pay any income i.e. the US Average House Price Index does not include any rental income, so that it is a simple price index. In contrast, the S&P 500 Index, for example, naturally compounds higher to reflect retained earnings.
The gold price then suffered a long and grinding 21-year bear market in which it lost 68% of its value from early-1980 to the bottom in 2001 near $255 an ounce. The overvaluation of gold relative to inflationary trends and relative to US house prices by early 1980 weighed on it subsequently. In addition, US interest rates after inflation (real interest rates) were high throughout the 1980s and into the early 1990s, which attracted investors’ monies and led to selling of gold.
From there a new gold bull market was born in 2001, and again from a gold price that had returned to near 2 times the average US Home Price Index level. Again, this deep initial undervaluation compared to the average US house price delivered welcome catch-up performance while fears around the potential inflationary impact of the Federal Reserve’s money printing (quantitative easing) post the Global Financial Crisis did the rest.
All told, the second great gold bull market from 2001 to 2011 resulted in a six-fold increase in the gold price. And that gold bull market, too, petered out with the gold price trading at 13 times the average US House Price Index level, and more or less equaling the prior peak ratio seen in early 1980.
However, the subsequent gold bear market lasted just over four years from late-2011 to early-2016 and never reached the depths of undervaluation that occurred by 1968 and 2001.
Nonetheless, the third great gold bull market started in early-2016 as investors realised that central banks had avoided a deflationary spiral post the Global Financial Crisis and fresh concerns arose regarding general government spending and central bank money printing in the developed world.
Enter the Russian invasion of Ukraine in early-2022 and the freezing of Russia’s foreign reserves held by democratic western central banks. This fueled further consistent buying of gold by central banks in non-democratic regions keen to avoid any dependence on financial assets that could be confiscated at times of conflict. Think China, India, Russia, Venezuela to name but a few (third chart). Gold is traded outside of the world’s banking systems.
The gold price is up nearly four-fold since early-2016 and the question today is; has this gold bull market further to go?
As Sir John Templeton once famously said: “Bull markets are born on pessimism, rise on scepticism, mature on optimism and die on euphoria.” Institutional and private investors have only joined this gold party of late, so that it doesn’t feel like we have reached a euphoric stage. Optimism prevails perhaps, but not euphoria, which suggests that this gold bull market has further to run.
As the gold price rises, so too have the level of bullish gold price forecasts. If history is our guide, and the gold price was to reach the same 13-14 times the average US House Price Index (currently at 331), you could argue for a peak gold price between $4,300 to $4,630 an ounce in this gold bull market, or 10-18% upside on the current price of $3,905 an ounce.
However, only time can tell whether history will rhyme here and the old gold price-to-US Average House Price Index ratio will act as a ceiling for the gold price in this current gold bull market or whether, as many believe, things really are different this time around!
About GillenMarkets
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Rory Gillen
Founder, GillenMarkets
3rd October 2025
