Two Tech Booms, Two Geopolitical Environments: Why Gold Fell in the 1990s and Rises Today
Despite similar stock-market euphoria and low inflation in both the 1990s and 2020s, gold fell in one era and rose in another — the difference is geopolitics.
Abstract
Gold fell during the dot-com boom of the 1990s but has soared during today’s AI boom. Inflation was subdued in both eras, so why the difference? This piece argues that the key lies in geopolitics: the 1990s were a relatively benign, unipolar moment, while the 2020s have been marked by overlapping wars and systemic instability. Prolonged crises, unlike short-lived shocks, can sustain gold demand for years.
1. Introduction
The late 1990s and the early 2020s share striking similarities: rapid technological advances, surging equity markets, and a sense of once-in-a-generation innovation. Both the dot-com boom and today’s AI boom were built on a story of transformative change. Yet gold, often viewed as a mirror of fear, behaved in opposite ways:
- Dot-com (1995–2000): Gold fell nearly 30% while the Nasdaq tripled.
- AI / pandemic boom (2019–2021): Gold rose more than 40% even as tech stocks surged.
Why the difference? Inflation cannot explain it — both periods featured subdued price pressures until after the equity boom peaked. The better explanation lies in the geopolitical environment: relatively benign in the 1990s, extremely fraught in the 2020s.
2. The 1990s: A Benign Geopolitical Landscape
The 1990s were a unipolar moment. The Cold War had ended, globalization deepened, and U.S. power was largely unchallenged. NATO handled conflicts in Bosnia and Kosovo with speed and unity. Terrorist attacks like the 1998 embassy bombings or the USS Cole in 2000 were tragic, but markets perceived them as isolated shocks, not systemic threats.
In this environment, investors poured money into tech stocks and treated equities as “the only game in town.” Treasuries offered positive real yields; gold looked irrelevant. With little geopolitical fear, gold drifted lower even as the equity bubble inflated.
Even the Sept. 11, 2001 attacks — a devastating moment in U.S. history — produced only a brief spike in gold. Prices jumped about 5% intraday as markets reopened, but quickly settled back. Unlike today’s drawn-out wars, 9/11 did not sustain a higher gold trajectory on its own; the real gold bull market of the 2000s owed more to the weak dollar, easy policy, and the protracted Iraq conflict.
3. The 2020s: Tech Optimism Meets Geopolitical Fear
The AI boom unfolded against a very different backdrop. Pandemic disruption, inflationary stimulus, and fracturing geopolitics created a world of simultaneous greed and fear.
- Russia’s invasion of Ukraine (Feb 2022): Gold surged above $2,000/oz in the first two weeks and remained elevated as the war dragged on.
- Israel–Hamas war (Oct 2023): Gold rose more than 5% in the first week and continued higher into November as the conflict persisted.
- Other stressors: Rising U.S.–China tensions, attacks on shipping in the Red Sea, and political volatility in Washington all reinforced the sense of fragility.
What makes the 2020s especially different from the 1990s is not only the severity of individual shocks, but their simultaneity. Russia’s invasion of Ukraine and Israel’s war with Hamas overlap in time, creating an environment of persistent geopolitical stress.
Gold has reflected this: even with stocks soaring, bullion has remained above $2,000/oz through much of 2023–2024, and as of September 2025 it hit a new all-time high above $3,700/oz as both conflicts remain active and, in many respects, intensifying.
4. Lessons from History: When Prolonged Crises Drive Gold
Gold has repeatedly responded to long, uncertain crises with sustained strength:
- Iran hostage crisis (1979–1981): Gold spiked to $850/oz in Jan 1980 and remained elevated through the 444-day ordeal, though inflation was also a major driver. In 1980, gold responding to hostages in Tehran and to higher U.S. inflation.
- Iraq War II (2003 onward): Unlike the short Gulf War of 1991, the drawn-out insurgency coincided with the start of a decade-long gold bull market
.
- Today’s conflicts (Ukraine, Israel–Hamas): Both have already produced meaningful rallies that remain in place months or years later.
Discrete events cause short blips in the price of gold. Prolonged stress keeps gold prices elevated.
5. Conclusion
The comparison between the dot-com and AI booms reveals that gold’s behavior is not just about technology or inflation. Both eras were marked by low inflation and rapid equity gains, but gold fell in the 1990s and rose in the 2020s. The difference lies in the geopolitical environment:
- 1990s: Relative calm, strong U.S. dominance, no systemic fear.
- 2020s: Pandemic scars, war in Europe, conflict in the Middle East, great-power competition.
Gold prices can remain elevated when fear and optimism coexist.
The dot-com boom had little geopolitical fear.
The AI boom has plenty.
Thanks for reading. I’ve kept the full essay free so anyone can see the argument about why gold fell during the dot-com boom but has surged during the AI era. An appendix with some links to data and contemporary news articles on these events are available for paid subscribers below. The paywall is new. More free and paid stuff will follow.
