Can the History of Gold in 1980 and 2011 Repeat Itself?

Can the History of Gold Prices in 1980 and 2011 Repeat Itself?

On Saturday, January 31, 2026, the discussion around gold once again came into the spotlight. A major question frequently raised among investors is: can the collapse in gold prices seen in 1980 and 2011 happen again today?

History shows that gold once experienced an extremely long period before returning to its previous peak. This is what makes many investors worry about the risk of being “trapped” for years.

Lessons from the 1980 Event

In 1980, gold prices reached a peak at around USD 670. However, after hitting that level, gold entered a prolonged decline and only returned to the same price approximately 26 years later, in 2006.

One of the main factors influencing this condition was interest rate policy. Data shows that during that period, the Fed aggressively raised interest rates. The benchmark rate reached as high as 12%, while U.S. government bond yields climbed to around 16%, and at one point even touched 19%.

When interest rates and bond yields are extremely high, a massive shift of capital occurs from gold to government bonds. In this situation, gold becomes a less attractive investment because it does not offer returns as high as government bonds.

This is the main reason why gold during that period experienced a prolonged bear market or sideways movement over a very long time.

A Different Situation in 2011

Unlike 1980, the 2011 event occurred when interest rates were extremely low. After the 2008 global financial crisis, the Fed lowered interest rates to nearly 0.1% and maintained them until around October 2015.

Prolonged low interest rates led to abundant liquidity in the market. Money circulated easily, and investors tended to seek instruments with higher potential returns.

In this environment, stocks became far more attractive than gold. As a result, gold prices once again moved sideways or stagnated until around 2016.

Two Conditions That Are Unfavorable for Gold

From these two historical events, an initial hypothesis can be drawn: there are two main conditions that tend to be unfavorable for gold prices:

• Interest rates that are too high
  As seen in 1980, when interest rates and bond yields were extremely high (16–19%), investors preferred government bonds over gold.
• Interest rates that are too low
  As seen in the period after 2011, when interest rates hovered around 0.1%, investors tended to shift toward stocks or other risk assets, including crypto.

Current Interest Rate Conditions and Their Impact on Gold

So, what about the current situation? At present, the Fed’s interest rate stands in the range of 4%–5%. This level is neither too high nor too low.

Under such moderate interest rate conditions, government bond yields are not attractive enough to completely overshadow gold, while the stock market is also not in an extreme euphoric phase. This makes gold and silver relatively attractive investment instruments once again.

The Role of Inflation in Interest Rate Policy

The extreme interest rate hikes in 1980 were closely linked to a surge in inflation in the United States, which reached around 13%. To bring inflation down to approximately 3%, the central bank was forced to raise interest rates aggressively.

Conversely, when inflation is too low or even near zero, central banks tend to lower interest rates as much as possible to stimulate economic growth.

Conclusion for Gold and Silver Investors

For gold and silver investors, it is important to understand that events like those in 1980 or 2011 do not happen randomly. There are key indicators to watch, particularly interest rates and inflation conditions.

If someone expects a repeat of the 1980 scenario, then interest rates and bond yields would need to rise to extreme levels. If one expects a repeat of the 2011 scenario, then interest rates would need to fall close to zero.

In the current environment, the most important thing is to build a strong investment strategy, be prepared to accept risks, and understand that every investment decision always comes with consequences.

If you are confident in your analysis and ready to bear the risks, then move forward. However, if you are uncertain, seeking alternative investments is a wise choice.

Hopefully, this discussion is useful and can serve as valuable consideration when making future investment decisions.