Gold is like any other commodity in that the price is a measure of supply versus demand; the reason why folks might think that the price is supposed to rise in politically or economically turbulent periods is the assumption that gold is a better store of value than other currencies (like the US dollar or the British pound). Supply of gold generally rises, just because of mining activities, but demand fluctuates a great deal. However in January 1934 the United States passed the Gold Reserve Act - this drastically cut down on the demand for gold, because you couldn't legally own it. With lower demand and increasing supply, the effective price of gold on the market (this was for perfectly legal industrial, jewelry, etc. purposes) fell, even though the act also set the nominal price of gold at US $35/troy ounce.