But anyone that bought gold in the January 21, 1980 peak of $850/oz never made a profit, if allowing for inflation. They may have gotten close to achieving a profit if they had sold at the peak of August 2011, when gold prices rose briefly above $1,950/oz, but to really make a profit, allowing for inflation, they would have had to sell for about $2,200/oz.
Serious authors have published detailed evidence of central bank suppression of gold "market" prices by derivative trading in recent decades. What this means is that the central banks' own assessment is that suppressing gold is necessary to support fiat currencies.
This is the essence of the gold standard. The difference is that the classical gold standard suppressed gold by selling gold at the official price to any holder of paper currency. Today's gold standard is hidden and more flexible, and saves embarrassment for the authoritis as currency goes through a rolling devaluation over the decades from $35 to the $1000 price range.
It is possible that the central banks allow gold to rise past the new target point, and then stage a revaluation of currency up, back to the target point, to send a message to gold bugs. This happened during both of the major post-Bretton-Woods devaluations (to the $300 range and to the $1000 range respectively.)
The four-century-long view of the modern monetary system is the gradual loss of control by the authorities to saver sentiment in favor of gold. The Dutch Golden Age saw a totally secure peg to specie, that went beyond the economic decline of the Netherlands (the agent of decay was public debt.) Britain ended up owning only 3% of the gold required to redeem its total paper issue on the Eve of the First World War, and was forced to bow out from hegemony. The US was forced to devalue the dollar explicitly by more than 50% during the Great Depression, and then close the gold window in 1971 to avoid running out of gold.
Now the gold standard has gone underground, with a rolling devaluation over four decades with the dollar losing 97% of its value against gold. Gold holders are also increasingly aware of the need to hold physical gold (thus making derivative-based suppression more difficult.)
The only bad scenario that I see for gold is, for whatever reason, a successful and drastic increase of financial repression.
