The mid-to-late 1970s was of course, the stagflation years where annual inflation rates were as high as 15%, partly due to cost-push inflation caused by the rise of the OPEC cartel. The last commodities bull before the current one was during then; commodities are the best inflation hedge, and chief among them was gold, partly because of nervousness about a possible collapse of the global financial system (still adjusting to floating rates) causing a flight to safety. Despite attempts to keep gold prices down by sales of gold from the US Treasury, and aided by a drop in the US dollar's exchange rate against its main trading partners, the price of gold doubled to US$400 in the space of one year in 1979, then doubled again to US$850 by early 1980.

Anyone vested in gold in the early 1970s would have seen his /her investment rise >2000% within the space of a decade. Hindsight, of course, is 20/20, but while the super-inflation in the late 1970s could not have been foretold, the reformation of the dollar-gold convertibility regime in 1971 would have suggested a strong catalyst to buy into gold for the astute investor. Without an artificial peg to gold prices (to the US dollar), and given the difficulties faced by the US Treasury in maintaining the regime prior to Nixon's repudiation of the long-held policy, the demand-supply dynamics that were released into play drove gold prices inexorably upward.

reference: The Privateer Gold Pages