20th Century

Gold price: £4.25 (£4.4s.11½d) or US$20.67 per troy ounce fine

Gold/silver ratio: 1:33.33

Gold production: 12.4 million ounces (S. African mines closed by Boer War)

The world-wide gold standard

In 1900 the United States went onto the gold standard, the last major nation to do so. Only China remained on a silver standard. The essence of the standard was a fixed price for gold, gold coin forming either the currency or with notes redeemable in gold. Internationally, free import and export of gold existed with balance of payments deficits settled in the metal. In 1900 central banks held 102 m.oz, while 131.5 m.oz of gold coin was in circulation or with commercial banks, making total ‘monetary’ gold 233.5 m.oz. The fact that the public held more monetary gold than central banks showed how the increase in gold output since 1848 had been absorbed.

1903 World production at record 15.8 m.oz; Australian output peaked at 3.8 m.oz (a level not equaled until 1988), while South African production accelerated over the next decade from 1.6 m.oz to 9 m.oz, 40% of world production.

1913 World output rose to 21.8 m.oz, with central banks competing to build up their stocks faced with the threat of war

1914 As World War I broke out, governments limited gold flows and called in almost 100 m.oz of domestic coin circulation, especially in Britain and France.

1919 On 12 September the first ‘fixing’ was held at Rothschild’s in London. The price was quoted for 995 fine ‘good delivery’, instead of standard gold of 916 fine, and although in sterling, reflected the sterling-dollar rate on New York. The fix was £4.18s.9d (£4.94), equal to the New York price of $20.67 per ounce.

1922 The Rand Refinery opened in South Africa, though gold still sold through London. League of Nations Conference in Geneva recommended return to the gold standard, but with limited domestic circulation of coin.

1925 Britain returned to gold ‘bullion’ standard at old fixed rate of £4.25 per ounce, but minimum purchase was 400 ounces. Small nations, such as Belgium, kept reserves in sterling (being tied to gold), Germany and Japan did not resume convertibility, France put all reserves in gold. By 1929 90% of ‘monetary’ gold held by central banks.

1931 In aftermath of 1929 Wall Street crash, and collapse of Credit Anstalt in Austria, strain on UK gold reserves at old price was too great. Britain came off gold standard, along with several other countries. Sterling devalued, creating gold price between £5.50 and £6.34, although US price remained $20.67 per ounce. Collapse of gold standard set off gold hoarding rush of 100 m.oz in next five years, while high sterling price encouraged Indian dishoarding of 40 m.oz from 1931-38.

1933 President Roosevelt halted gold exports, convertibility of dollar bills into gold, and ordered return by US citizens of all gold coins. They handed in 16 m.oz. 1934 On 31 January Roosevelt set a new price of $35 per ounce. The US Assay Office bought all gold offered at that price, pushing US reserves from 90 m.oz to 364 m.oz by 1938, and to 650 m.oz in 1942.

1935 Fort Knox built in Kentucky to accommodate the growing gold stocks.

1936 Gold at $35 set off a mining boom. US output rose from 2.6 m.oz in 1933 to 4.4 m.oz in 1936, and peaked at 6.0 m.oz in 1940 (not equalled until 1988). Canada hit 5.5 m.oz in 1941 (best until 1991). World output up from 20 m.oz to 38.6 m.oz by 1940. France, Holland and Switzerland came off the gold standard.

1939 London market closed on outbreak of war; final fix was £8.1s.0d (£8.05) per ounce.

1944 Bretton Woods Agreement set up post-war international monetary system on gold exchange standard, whereby currencies exchanged into gold at stable rates.

1946 In South Africa, Anglo American located Orange Free State reefs where Free State Geduld, President Brand, President Steyn and Western Holdings opened in early 1950s.

1949 US gold reserves at peak of 707 m.oz, 75% of western world stocks.

1952 Gold Fields of South Africa opened huge West Driefontein mine.

1953 Gold sales by Soviet Union began; 96.6 m.oz over the next 13 years.

1954	London gold market reopened; first fix on 22 March was £12.8s.6d. (£12.42) per ounce.

1961	Gold pool of US and main European central banks set up to defend $35 per ounce price. Pool operated by the Bank of England on direct line to the London fixing.
1968	Collapse of gold pool and defence of $35 gold, after devaluation of sterling and pressure on dollar sent private speculators into gold. After pool lost 94 m.oz in a week, London market closed, fix suspended and era of a stable gold price was over. When the market reopened the fix switched from sterling to dollars. Meanwhile the three big Swiss banks had started their own gold pool to market South African production.
1970	Peak for South African production at 32.15 m.oz (78% of non-communist output).
1971	Federal Reserve in New York closed its ‘gold window’ where central banks had been able to trade in dollars at $35 an ounce for gold. The balance had shifted so that US reserves were under 300 m.oz, while Europe’s central banks had over 645 m.oz.
1974	London’s highest fixing price of $197.50 per ounce anticipated US market opening.
1975	US citizens again permitted to hold gold; Comex started gold futures trading. US Treasury began five-year gold sales programme involving 17 m.oz.
1976	International Monetary Fund began four-year series of auctions of 25 m.oz.
1980	Record London fixing at $850 an ounce on 21 January ended an inflationary decade of oil price shocks, freezing of Iran’s assets and Soviet invasion of Afghanistan, which sent investors rushing for gold. Average London price for the year was $614.63.

1985 Average price down to $317.32, but high prices sparked mining boom

1987	Average price up to $446.07 helped by stock market fears and Taiwan central bank buying.
1989	Central banks turn sellers throughout next decade, disposing of over 100 m.oz.
1992	Rising jewellery/industrial demand at over 100 m.oz, exceeded mine output by 31 m.oz.
1997	Asian financial crisis caused 16 m.oz dishoarding 1997/98, pushing down price.
1999	The Euro launched, with 15% of European Central Bank reserves in gold. In May the Bank of England announced sale of over half UK gold stocks. But in September 15 European central banks announced a five-year ceiling on gold sales and a freeze on new lending, giving the market much-needed support and a price rally to end the millenium.