The Trading Range 1994-96

With the exception of a short-lived sojourn above the $US 400 level in February 1996, the $US Gold price was "trapped in amber" for two years, from the beginning of 1994 to the beginning of 1996. For all but about a month of those two years it was caught in an extraordinarily tight $US 20 trading range between $US375 - 395. By late 1995, the volatility on the Gold market had reached its lowest level since the late 1960s, when the Gold price was officially capped at $US 35 an ounce.

Consider what had happened during this three-year trading range:
A debt crisis in Mexico. A debt crisis in the State of California. A global bond market bloodbath - in 1994. A trade war between the U.S. and Japan averted at the last second. A huge boom on the U.S. stock market - in 1995-96. The U.S. Dollar plummeting to record lows against the Yen and multi-year lows against the D-Mark. Debt collapse and actual deflation in Japan. The near total dependence by the U.S. Treasury on foreign buyers to buy newly-issued U.S. government debt. Foreign Central Bank holdings of U.S. Treasury debt expanded rapidly throughout the period. A "balanced budget" debate in the U.S. which led to two government shut downs in October 1995 and January 1996.

A $US 600 Billion increase (to $US 5.5 TRILLION) in the U.S. debt ceiling. Even more interesting, this Gold "trading range" against the U.S. Dollar has not been reflected in the Gold price of other major currencies. The high and low spot Gold prices against the world's three major currencies over the three year period 1994-96 were as follows ..