In August 1971, the United States stopped converting dollars into gold for foreign governments. This helped end the Bretton Woods system of fixed exchange rates and pushed gold toward more market-based pricing. The shift set the stage for futures markets to play a bigger role in price discovery (how markets find a common price).
On October 23, 1974, President Gerald Ford signed the Commodity Futures Trading Commission Act. The law overhauled federal oversight of futures trading and created the Commodity Futures Trading Commission (CFTC) as an independent regulator. This strengthened the legal and supervisory foundation for newer futures markets, including precious metals.
Restrictions on private U.S. gold ownership were repealed effective December 31, 1974, allowing Americans to buy, hold, and sell gold more freely. This change expanded potential participation in gold markets beyond a limited set of institutions. It also aligned with the launch of standardized exchange trading in gold-linked contracts.
Gold futures began trading on the Commodity Exchange, Inc. (COMEX) on December 31, 1974. The contract standardized key terms, including a contract unit of 100 troy ounces, making it easier to hedge price risk or speculate with a common rulebook. Over time, these contracts became widely referenced price benchmarks for gold trading.
In April 1975, the first CFTC commissioners were sworn in, and regulatory authority formally transferred from the U.S. Department of Agriculture’s Commodity Exchange Authority to the CFTC. This created a single federal regulator with broad jurisdiction over futures markets. The shift mattered because it centralized oversight as futures expanded beyond traditional farm commodities into metals and financial products.
In 1977, Congress changed federal law so that “gold clauses” could be used again in contracts made after the change. A gold clause is a contract term that ties payment to gold (or a gold value) rather than only dollars. While separate from futures trading, the legal change reflected broader acceptance of gold-linked financial arrangements during the growth of modern derivatives.
By late 1979 into early 1980, investors moved heavily into precious metals as U.S. inflation and economic uncertainty rose. This period saw sharp run-ups in gold and especially silver, with more trading and larger positions in futures markets. The volatility highlighted how futures markets could amplify stress when leverage (borrowed money and margin) was widely used.
On March 27, 1980—known as “Silver Thursday”—silver prices collapsed after an attempted market corner by the Hunt brothers unraveled. The crash triggered severe margin pressure and forced selling, stressing brokers and lenders tied to futures positions. The event became a key lesson in the risks of concentrated positions and high leverage in commodity derivatives.
On October 4, 1982, COMEX began trading options on gold futures. An option gives the buyer the right, but not the obligation, to buy or sell a futures contract at a set price before expiration. Adding options expanded the “toolkit” for hedging and trading gold price risk with defined downside for option buyers.
On October 4, 1984, COMEX began trading options on silver futures. This broadened how industrial users, investors, and dealers could manage silver price swings after the extreme volatility earlier in the decade. It also marked a continued shift toward more complex, layered derivatives built around benchmark futures contracts.
On July 29, 1988, COMEX launched High Grade Copper futures, expanding its metals derivatives lineup beyond precious metals. Although copper is not a precious metal, its successful futures market reinforced COMEX’s role as a major U.S. venue for standardized metals risk management. The growth of multiple metals contracts supported deeper exchange infrastructure for clearing and delivery systems.
By 1990, COMEX gold futures and related options were established tools for hedging and trading gold price risk, supported by CFTC oversight and exchange clearing. The period from 1974 to 1990 showed a clear arc: legalization and regulation enabled new contracts, volatility stress-tested the system, and options expanded risk-management choices. This foundation helped make exchange-traded precious-metals derivatives central to modern price discovery and hedging practices.
Creation of the COMEX Gold Futures Market and Early Modern Derivatives (1974–1990)