Gold is dispersed throughout the Earth's crust and has since ancient times been valued both for its scarcity and for its metallurgical properties. Before the 19th century, most nations maintained a bimetallic monetary system, which often included gold but consisted mainly of silver. Starting in Britain in 1821, monetary units were exchangeable for a fixed amount of gold at a predetermined Gold Price Per Ounce, a change that Britain expected would stabilize its rapidly growing economy. As the Industrial Revolution spread, other countries followed suit, and by the end of the 19th century, most industrialized nations were following the gold standard. In the new global economy, the common standard facilitated international monetary transactions and stabilized exchange rates.
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MST. The price of gold in dollars had increased tremendously, but commodity prices had not kept up with the same pace. To stop the flow of funds into gold and the exhaustion of government gold reserves, in 1933, President Franklin D. As hard as it is to believe now, people in Germany, during the hyperinflation of 1919-1923, often thought the same thing: that the price of gold and foreign currencies was rising, not that the German mark was falling.
This threat would force governments to change the rules, as the currency became more common and gold reserves became scarce. While the price of gold may seem cheap in the past, adjusted for inflation is not as low as you might think. The fall in the price of gold in dollars after the mid-1980s and until 1982 was due to a rise in the dollar index. In addition to the various arguments presented here, today there are some problems between the prices of “gold on paper” and the supply and demand of real ingots.
We have already seen that, in the mid-1940s, people were not sure what the relationship between their currencies and gold was or should be. To clean up the commodity market, real values (in terms of gold) must fall to a level that people can afford. I believe that, since 1970, gold has basically played the role it has always played throughout history as a measure of stable value. The pressure to increase interest rates, the debt-driven aging of the economy, the trade war with China and the recent COVID-19 crisis have once again led to economic uncertainty and renewed interest in gold.
In the United States and many other countries, currencies remained “linked to gold” until the 1970s, when the decline in global reserves marked the gold standard's last death sentence. However, it seems that, even despite all the turmoil and capital controls of World War II, gold also remained more or less stable in value during that time.
