Good as gold
The price of gold reached $1,000 per ounce for the first time on March 13, 2008. This should have been no surprise, considering the debt-fueled economic slowdown then underway, which the Federal Reserve (and other central banks) had been attempting to combat through lowered interest rates. However, gold had begun rising early in the new millennium with relatively little slack even during a period of supposed economic strength. UBS metal strategist Robin Bhar told CNNMoney: “The current environment is such that the doom and gloom scenario plays right into investors’ hands. … Though forecasts point to no recession, hedge fund clients are quite fearful right now.”
The National Bureau of Economic research would later confirm that a recession was then already underway. Even the end of that recession did little to halt the rise of gold, which topped out at nearly $2,000 per ounce in 2011. Only the post-Nixon gold bubble of the 1970s surpassed the growth of gold over the first decade of the 21st century, as its inflation-adjusted peak was near $2,500 per ounce in early 1980.
Oil must flow
Leaders of the Organization of Petroleum Exporting Countries, or OPEC, finally lifted their crippling embargo against the United States on March 13, 1974. The embargo, enacted the previous October, had been a measure of revenge against the U.S. for its support of Israel in the Yom Kippur War. American peace initiatives seemed enough to assure Arab ministers that they had seized the upper hand after failing to do so with a surprise attack.
The embargo had indeed been a terrible vengeance: A barrel of oil quadrupled in price, from $3 to $12, over the course of the embargo. This action, and President Nixon’s 1971 decision to take the U.S. off the gold standard, combined to create one of the worst postwar economic climates. The Dow Jones Industrial Average 2 Minute (Dow Jones Indices:.DJI) lost 45% of its value during a highly inflationary bear-market period, but most of the decline actually occurred after the embargo lifted, as the economic impact took some time to work its way through the American system.
The triumphant conclusion of OPEC’s embargo proved to be the high point of the organization’s power. Another oil price shock at the end of the 1970s came as a result of instability and war in Iran, which was not part of the cartel. Shortly after Iran again stabilized, the world entered a period of oil surpluses that pushed prices down to historic lows. The 1973 embargo was a short-term success, but in the long run it had forced other nations to explore for oil more intently and focus more on energy efficiency initiatives. A decade after the embargo ended, the U.S. was importing less than 30% of its oil, which was a substantial decline from the near-50% importation rate it had sustained during the oil-scarce 1970s.
The article Celebrating One of the Greatest IPOs of All Time originally appeared on Fool.com and is written by Alex Planes.
Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool recommends Apple. The Motley Fool owns shares of Apple, International Business Machines (NYSE:IBM)., and Microsoft.
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