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The 1980s bear market

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After Ronald Reagan won the presidency in 1980 in a landslide, he retained as Federal Reserve chairman Paul Volker, who held (fortunately) an austere guidance with the money supply and allowed interest rates to be at a high and painful level (as high as 21 percent at one point), and this austere approach broke the inflationary spiral. The country experienced a recession in 1981, but it was worth it. Coupled with historic tax cuts, the economy rebounded, and the stock market had a strong decade.

The public’s appetite for safe-haven assets declined, which in turn sent gold into an extended bear market. Nimble investors rebalanced their portfolios. They decreased (or removed entirely) their gold-related stocks and assets and switched to assets that would excel with a stronger economy such as stocks.

Investing in Gold & Silver For Dummies

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