Gold’s Barbarous Allure: A History of Market Crashes and Enduring Myths
From the 1869 Black Friday to the 2008 crisis, the precious metal's history is one of manipulation, narrative, and inevitable collapse.
In 1869, financiers Jay Gould and James Fisk orchestrated a bold attempt to corner the American Gold market, leveraging their political connections to drive prices to dizzying heights. Their success was short-lived. The scheme unraveled in a matter of hours after the government intervened, releasing its gold reserves and triggering a catastrophic collapse.
The event, which became known as Black Friday, wiped out fortunes and shattered confidence in the financial system for years. It established a familiar pattern of manipulation, euphoria, and collapse that continues to define the precious metal.
The same market psychology was on full display during the 2008 financial crisis. As global markets crumbled, the price of gold surged from $700 to nearly $1,900 an ounce, fueled by a flight to safety.
The rationale was timeless: when all other assets lose their value, gold endures. Yet, as the crisis subsided, prices inevitably retreated. The apocalyptic scenario never materialized, and the illusion of gold as an instrument of absolute security once again proved to be fragile.
Theories and Market Narratives
Economists and historians have long scrutinized this dynamic. In The Great Transformation, Karl Polanyi argued that markets are not “natural” forces but are shaped by human emotion and social structures. From this perspective, gold functions less as an economic bedrock and more as a powerful cultural symbol.
John Maynard Keynes famously dismissed the metal as a “barbarous relic” in his seminal work, The General Theory of Employment, Interest, and Money.
More recently, Robert Shiller’s Irrational Exuberance demonstrated how compelling narratives, rather than hard data, often drive market behavior. In this light, gold is not merely a commodity but a story—and every story eventually reaches its end.
