While gold has rallied 350% from the lows of 1999 and is up about 285% when adjusted for inflation, this still pales in comparison to the 1976-1980 bull market in bullion. During this period, the price rose by more than 750%.
To some, this suggests that history is repeating itself and gold is heading beyond US$2,000 per ounce. That might be why John Paulson is launching a pure-play gold fund.
Let's start with the U.S. dollar, which the price of gold is widely understood to mirror. When the dollar falls, the price of gold has to rise, assuming nothing else has changed in the supply and demand balance.
