I'm always wary when someone cites a historical analogy, adds some seemingly relevant anecdotal observations, and concludes: "Well, the future is set"—as a skeptic. As a skeptic, I wonder if they're truly reasoning from first principles, bottom-up, or driven by a top-down impulse to confirm a pre-existing viewpoint. It's with this concern that I offer my understanding of the similarities between the present and the 1970s—and how these similarities might tell us where gold prices are headed. For those currently agonizing over whether they've simply "gone long and made a mistake," this comparison might offer some solace. For those still searching for evidence that we've returned to 1975: bell-bottoms are back in style, inflation is a headache, oil is a nightmare, and gold investors are baffled as to why their inflation hedge isn't behaving like a hedge. We're now just missing a Ford Capri…sorry, I couldn't resist: it's a terrible comparison. But in short, there is significant overlap. The first oil crisis began in late 1973 when an Arab oil embargo caused crude oil prices to skyrocket. US inflation accelerated rapidly, the world held its breath, and interest rates and Treasury yields rose accordingly. The 10-year Treasury yield was around 6% in the early 1970s, rising to over 8% by 1974. Gold initially rose—but then crashed—as oil prices roughly quadrupled from pre-embargo levels. Importantly, by the mid-1970s, serious questions began to arise: had gold, as a long-term store of value, a last-line asset, and an inflation hedge, somehow become ineffective? This is quite similar to our current situation. Consider the January 1975 issue of *Time* magazine, titled "The No-Stop Buying Spree," which described the surprisingly muted reaction from Americans after regaining the right to own gold bars. The U.S. Treasury offered 2 million ounces of gold in auctions, but only sold 756,000 ounces. A later assessment by the International Monetary Fund (IMF) showed that speculative and investment purchases plummeted from 519 tons in 1974 to 164 tons in 1975, citing "unexpectedly weak demand" from U.S. investors. Gold itself fell from around $200 per ounce at the end of 1974 to nearly $100 in August 1976. But history ends there. Perhaps we are not in 1979. A more interesting analogy might be the period of calm in 1975: the inflationary shock had occurred, inflation remained a problem, but rising bond yields and confidence in policy responses temporarily suppressed gold. The danger for the bears lay in what would happen next. Gold's decline in 1975-76 wasn't due to the disappearance of inflation, but rather to investors' growing belief that the "medicine" was working. Inflation was falling, nominal yields remained high, and real interest rates were improving. But when the market realized the patient wasn't cured, gold embarked on its second major rally. It's no coincidence that oil was at the center of both events—especially if, like me, one fundamentally views the economy as an energy conversion system—but I digress. The key point is that, in my view, energy costs are likely to remain structurally high for a long time. The green transition and windfall profits taxes have dampened investment in traditional supplies, while geopolitical tensions are increasingly weaponizing key energy chokepoints. Cheap and reliable energy can no longer be taken for granted. Events in the Middle East have once again exposed economic vulnerabilities. Meanwhile, the shifting geopolitical landscape suggests that our increasingly polarized world will increasingly manifest itself in de-dollarization and the weaponization of everything important to adversaries—currencies, payment systems, trade, technology, commodities, and of course, energy. But we've missed a crucial element—one that provides a large part of the explanation. Gold is not an isolated barometer. There is a transmission mechanism. Gold is sensitive not only to the absolute levels of the dollar and Treasury yields, but also to market expectations about their future direction. Markets act in advance by anticipating the next move. By 1975, the market increasingly believed that high interest rates and recession would eliminate inflation. There was a degree of optimism that the "medicine" was working. Subsequent events proved this optimism premature. Inflation subsequently returned, and the second oil crisis of 1979 dealt a fatal blow to this optimism. The important change was psychological: the market began to realize that inflation had not been conquered and policymakers were still behind the curve. After bottoming out at around $105 per ounce in 1976, gold finally reached $850 in January 1980. It should be noted that gold clearly overshooted. It subsequently underwent a significant correction before settling into a new, much higher nominal trading range—more than double the previous level. Therefore, the lesson is not that the 1970s provided some kind of magic multiplier for today's gold prices. No. The relationship between the two is not simply: rising oil prices → rising inflation → rising gold prices. It might be: rising oil prices → rising inflation expectations → rising Treasury yields → temporarily suppressed gold prices. This could then evolve into: persistent inflation → wavering confidence in policy responses → deteriorating real yields → rising gold prices. The lesson of the 1970s is not that gold loves inflation. Rather: gold loves the kind of inflation that policymakers cannot—or are unwilling—to anticipate. If 1975 is the corresponding era, then today's weakness in gold may not be telling us that the inflation logic is wrong. It may simply be telling us that the market still believes the "medicine" will work. Bigger price movements in gold will occur when the market discovers the medicine isn't working. I must resist the urge to mechanically extrapolate the gold prices of the 1970s and everything that followed to today's market. Leaving aside the intellectually questionable nature of such an approach, the resulting figures will inevitably make headlines—which they shouldn't. The important thing is the reasoning itself. Based on my crude and oversimplified understanding of things, the clues to the next big gold price movement may therefore come from the bond market. Higher yields can be interpreted as evidence of a strong economy and market confidence in the effectiveness of monetary policy. But just as a flushed face can indicate excellent health—or a dangerously high fever—high bond yields can also point to two very different scenarios. They could reflect stronger economic activity and confidence in the future. Or they could reflect the opposite: growing anxiety about inflation, fiscal sustainability, and whether investors are willing to hold long-term U.S. "IOUs" without significantly higher compensation. Figuring out when the scenario will shift from one to the other may be crucial for gold. We'll see.