1997 was the third worst year for $US Gold since the price became subject to market forces in 1971. The worst year was 1981, when Gold was coming off an $US 850 blow off high the previous year and battling 20% plus interest rates. The second worst year was 1975, the year when Americans regained their "right" to own Gold for the first time since 1934.
1997 has to be broken up into two halves. In the first half of 1997, stock markets everywhere - including Asia - were booming and Gold was sliding very slowly in terms of most currencies.
The second half of 1997 was when the Asia "flu" hit the world's markets. What started as a currency crisis in Thailand in July had, by the end of the year, expanded into a global financial crisis of unprecedented proportions.
The dividing line between these two six-month periods can be neatly drawn by the hand over of Hong Kong back to China on July 1, 1997. Hong Kong was the last Asian "nation" to be governed by a foreign power. Within weeks of this hand over, the 30-year era of the Asian "Tiger Economies" was over.
Here are the signal events of 1997 - especially the second half of 1997:
In 1981, Gold's worst year, the world was locked in recession. In 1975, Gold's second worst year, the world was locked at what was described as "stagflation" - rising (price) inflation and rising unemployment. This was an economic phenomenon held to be "impossible".
In 1997, Asia went into an economic and financial death spiral which can only be compared to what happened to the world in the Great Depression of the 1930s. But this was not a worldwide phenomenon. In Europe, markets boomed all year. In the U.S. markets boomed, the economy boomed, unemployment hit 30 year lows, and the Dollar became the most sought after investment in the world.
On November 26, 1997, the spot future Gold price closed below $US 300 (at $US 296) for the first time since March 15, 1985. Gold ended 1997 at $US 289.90. The $US 300 "floor" which had supported Gold ever since it first rose above that level in July 1979 had now become a "ceiling"