Gold Hits $1300 An Ounce
Written on Sep 24th, 2010
Hard to believe that less than 30 years ago gold was trading at $35/ounce. At that time, the US Dollar was fixed to the price of gold due to an agreement called the Bretton Woods Agreement. That agreement effectively forced countries to back their currencies with gold, which ultimately enforced sound fiscal policies on the participating countries (you can’t spend money you don’t have). Unfortunately the inability to spend money they didn’t have eventually caused the United States to break out of the BWA: In 1971 Nixon decided to end the convertibility of the US Dollar into gold, which effectively was the same as declaring the United States insolvent. Since that time the Federal Reserve in the US and most of the central banks around the world have engaged in inflationary economics, resorting to printing money to pay off their debts. Gold (and other precious metals) have historically been used […]
