According to Tim Zyla's analysis in The Jerusalem Post, although the price of gold skyrocketed to historical highs in 1979 and 2011, followed by a drop of 50% or more, the current price level may actually be sustainable.

He writes: "Gold has had two major peaks over the past 50 years—1979 and 2011—but 2024 has just joined the club, after gold recently broke through the trendline connecting the previous two peaks over 32 years."

He shared a chart showing gold breaking through its 45-year historical trendline.

Zyla believes that the key question is whether this milestone should be interpreted as bearish or bullish.

He said: "While conventional wisdom holds that linear charts are hard to use as definitive evidence of any single directional move, let's compare the world economy in 1979 and 2011 to understand the next move for gold."

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He first painted the geopolitical and economic environment in which the gold rebound occurred 45 years ago.

"It's now 1979.

He writes: "The Soviet Union has just invaded Afghanistan, Margaret Thatcher has been elected Prime Minister, and the United States has had its first nuclear accident at Three Mile Island."

"More importantly, inflation has reached an unprecedented 11%, and unemployment is close to 6%.

This sounds worse than the economy after the COVID-19 pandemic—and it is—at least before Paul Volcker took office."

Zyla said that the incoming Federal Reserve Chairman proved himself to be "the hawk of all hawks.

He saw the economic problems and said there was only one way to solve them—pain."

Under Volcker's leadership, the federal funds rate reached a peak of 20% in June 1981.

He pointed out: "Understandably, the gold price plummeted from the top until it reached the same level 32 years later in 2011, after Volcker's drastic measures."

He said that the events surrounding the 2011 gold rebound were different, but the rise in gold prices was also driven by specific geopolitical and economic shocks.

Zyla wrote: "While the inflation event in 1979 was triggered by the energy crisis in the Middle East, the surge in gold in 2011 can be attributed to one main factor—the misbehavior of global banks—and several secondary factors."

"After the U.S. government decided to use taxpayers' money to bail out most banks from bankruptcy, gold became the smartest choice.

The situation the U.S. government is entering is unprecedented.

Not many economists know exactly what the impact will be, so naturally, investors turned to gold as a safe-haven asset."

By August 2011, gold was trading at over $1900 per ounce in the spot market, and then it fell into a downward trend again, falling more than half from the peak to the trough.

He pointed out that once the narrow and specific economic and financial drivers of the gold price increase were eliminated, the gains in the precious metal would fall back.

He said: "The U.S. government's policy of bailing out banks brought short-term concerns and boosted gold, but as time went on, it proved to be successful, and as the prospect of a global financial collapse receded, gold prices began to fall steadily."

Zyla said that this rebound is different from the other two.

He observed: "Compared with the previous two rises, the main difference in the current significant rise in gold is obvious—there is no major or catastrophic event causing the gold price to rise."

"Of course, inflation is real, but it is far from the level of 1979, and there are not many people calling for the collapse of the entire financial system now."

He concluded: "Starting from the peaks in 1979 and 2011, both declines were relatively quick and sharp, leaving retail investors almost no time to react, but due to the leisurely nature of this gold rise, this situation is unlikely to happen again."

"Although short-term adjustments are always possible, with the Federal Reserve hinting at easing monetary policy, there are few signs that gold will not continue to maintain its momentum this time."