One of the key developments in the markets so far this year has been the significant gold price rally.

Since December 31, gold is up by 16.6 percent in dollar terms, 15.6% in euro terms, 24.4% in British pound terms and 9.3 percent in Japanese yen terms

This gold price rally in dollar terms of the past 40 trading days ranks it in the top 8 percent of gold upward moves, over a comparable time span, since 1968, and in the top 5 percent against the British pound since 1970. Against the euro it also ranks in the top 5 percent since the euro was introduced on 1 January 1999.

It is understandable that the gold price rally since December 31 confuses a good part of investors.

Given that the only really significant development for the currency markets has been the announcement the U.K. will have its referendum about the U.K. staying or not within the European Union (EU) on June 26, which automatically has risen concerns about the impact a “No” vote could have on the British pound.

So, I don’t think it’s an overstatement saying the gold price rally we have seen so far this year is, at least in part, related to this event.

In fact, what happens with the gold price these days makes me think back to the period of the European currency crises of the early 1990s when the European Monetary System (EMS) came under heavy pressure because the differing economic policies and conditions of its member States, especially the newly reunified Germany, and Britain, which had initially declined to join and only did so in 1990, permanently withdrew from the system in September 1992.

Speculative attacks on the French Franc during the following year led to the so-called Brussels Compromise in August 1993 which established a new fluctuation band of +15 percent.

When we take a quick look on a long term gold price chart in dollars we see there been relatively few gold counter-trend moves after the notorious volatility in the early 1980s and then on to the first half of 2001.

Anyway, we’ll have to wait until 1985 for seeing 3 significant counter-trend rallies to take place.

The first gold rally coincided with period between the Plaza Accord of September 22, 1985 in which the G-7 agreed the dollar was too strong and the Louvre Accord of February 22, 1987 when the G-7 agreed the dollar was too weak and should be stabilized.

The third gold rally occurred after the Washington Agreement on Gold on September 26, 1999, whereby the main Central Banks at that time agreed that gold should remain an important element of global monetary reserves and to limit their sales to no more than 400 tons (12.9 million oz.) annually.

However, it is in context of what happens these days with the gold price it is the second rally that is of interest here.

The 1993 gold rally began in March of that year at about $328 per oz. when renewed pressures emerged within the European Exchange Rate (EER) mechanism.

On May 14, 1993, the Spanish peseta was devalued and gold rose to about $377 per oz. or by about 14.9 percent.

Then, the French franc got further under heavy pressure until on Monday August 2, 1993 the EER band was ‘widened’ to 15 percent (!) and the French franc could remain within the EER band and had not to devalue ‘technically.’ On that Monday, gold reached its “Peak” at $405.60 and thereafter corrected by about 13% over the coming days.

The reason for raising this European monetary episode now is that something is nagging away at me and probably at investors is about the nature of the recent gold price upward move in a deflationary environment.

The fact that the recent spike in the gold price does not primarily seem to have been about monetary policy concerns 'per se,' therefore it seems, at least to me, worth paying attention to what precisely happened 23 years ago when troubles happened in the run-up to the single currency unit (euro).

Please don’t overlook that in case the British referendum gives a “NO” vote, the U.K. will have 3 years (!) to adapt to the new situation, and no, that is not priced in at the moment.

So, nobody should be surprised if we should get some kind of a similar scenario to what we got with gold in 1993.

Etienne "Hans" Parisis is a bank economist who has advised global billionaires and governments on the financial markets and international investments. To read more of his articles, GO HERE NOW.