Abandoning the gold standard was a seminal moment, and one we're now all paying for

[mick silver]

http://www.telegraph.co.uk/finance/comment/edmundconway/8699815/Abandoning-the-gold-standard-was-a-seminal-moment-and-one-were-now-all-paying-for.html

[JohnQPublic]

"Were it not for that decision, it is quite feasible that we would not have suffered created the financial crisis of the past four years; or indeed the crisis after crisis that have beset the world's markets. We might not have just faced the most volatile few weeks in markets since 2008."

There fixed it for them.

[DMac]

40 years ago today the Nixon closed the "Gold Window". Most folks call it the end of the gold standard, but that is not entirely correct. It was referred to as the gold window because the US had a fixed price for gold - $35. At the time, the going market rate for gold was about $42 per ounce. This "Gold Window" at the time was yet another means for free money for the banks. They could buy gold from the US gov at their official price, then turn around and sell it on the open market for easy profits.

As a corollary, when the gold window was shut, this allowed the current market price for gold to fluctuate - and did it ever! by 1980 there was a high in the price (mostly due to runaway US inflation) of $850 per ounce.

Did you know, by the way, that when Nixon closed the gold window, the US gov changed the on the books price of US owned gold from $35 to $42 per ounce, where it is still officially at today?

All the gold (erm, excuse me, tungsten ;) ) in Fort Knox is valued at that 1971 price, still to this day, with gold clawing at $1800 per ounce, what is the Gov waiting for in what will be the next gold revaluation? Jim Rickards might be right.

Food for thought for today, August 15th. Tune in next time for this day in history!!!! hahahahah :D:D:D

[Shami-Amourae]

http://www.youtube.com/watch?v=AWc_BNV1FMM

[Serpo]

FRN..............F#ck Richard Nixon..................haha

[MAGNES]

Mick has some of the best threads here, he doesn't just copy and paste from WRH,
I was going to open my own thread on this, some eye opening numbers in it we all know
about but still eye popping,

Gold is 50 times what it was exactly 40 years ago today.

" Fiat money is as perfect as the men behind it. " Aristotle, quote something
along those lines, speaks to man, not Fiat, never trust authority and those
in power.

Some good charts too.

Look at the last chart, $ 7,000 Gold is coming to be comparable to 80's high.

An inflated $INDU, 7,000 low to match gold $ , historical charts bottom signal for turnaround.


Today is the 40th Anniversary of Nixon Ending Gold Standard and Creating Modern Fiat Monetary System

http://www.goldcore.com/goldcore_blog/today-40th-anniversary-nixon-ending-gold-standard-and-creating-modern-fiat-monetary-sy

Published in Market Updates (http://www.goldcore.com/goldcore_blog_category/Market%20Updates) Precious Metals Update (http://www.goldcore.com/goldcore_blog_category/Precious%20Metals%20Update) on 15 August 2011
14 (http://www.goldcore.com/goldcore_blog/today-40th-anniversary-nixon-ending-gold-standard-and-creating-modern-fiat-monetary-sy#)Share

Gold has fallen today in all major currencies except the Swiss franc which has fallen sharply again on continued talk of SNB intervention. Gold is trading at USD 1,742.70, EUR 1,220.10, GBP 1,068.70, CHF 1,375.60 per ounce and 133,820 JPY/oz. Gold’s London AM fix this morning was USD 1,738.00/oz, EUR 1,214.11/oz, GBP 1,065.88/oz.
http://www.goldcore.com/sites/default/files/editor/goldcore_bloomberg_chart4_15-08-11.png (http://www.goldcore.com/sites/default/files/editor/goldcore_bloomberg_chart4_15-08-11.png)
Gold in Swiss Francs reached 1,393.24 an ounce this morning – the highest price so far in 2011. Gold in Swiss francs has climbed 7.7% so far in August, 3.7% in 2011 and 8.2% in the past 12 months as gold reasserts itself as the true safe haven.
On this day, August 15th, 40 years ago, President Nixon announced the end of the Gold Standard and the end of the Bretton Woods international monetary system (see video of Nixon’s dramatic announcement here). (http://www.youtube.com/user/GoldCoreLimited)
This was one of the most important decisions in modern financial, economic and monetary history and is a seminal moment in the creation of the global debt crisis confronting the U.S., Europe and the world today.
http://www.goldcore.com/sites/default/files/editor/goldcore_bloomberg_chart1_15-08-11.png
(http://www.goldcore.com/sites/default/files/editor/goldcore_bloomberg_chart1_15-08-11.png)Cross Currency Rates
Nixon ushered in an era of floating fiat currencies not backed by gold but rather deriving value through government “fiat” or diktat.
While Nixon justified the move was that the U.S. , then as today, was living way beyond its means with the Vietnam war and growing military industrial complex leading to large budget deficits and inflation.
Governments internationally including the French and their President Charles de Gaulle were concerned about the debasement of the dollar and began to exchange their dollar reserves for gold bullion bars.
Subsequent to Nixon’s decision 40 years ago, the U.S. dollar has fallen from 1/35th of an ounce of gold to 1/1750th of an ounce of gold today.
http://www.goldcore.com/sites/default/files/editor/goldcore_bloomberg_chart2_15-08-11.png
(http://www.goldcore.com/sites/default/files/editor/goldcore_bloomberg_chart2_15-08-11.png)Gold in Nominal USD – 1971 to Today (Weekly)
This is not the fault of “speculators”, rather it is the fault of profligate governments and central bankers debasing the U.S. dollar since 1971 (except for Federal Reserve Chairman Paul Volcker).
Today, U.S. dollars and all paper and digital money is declared by governments to be legal tender, despite the fact that it has no intrinsic value and is not backed by gold reserves.
Historically, currencies were based on precious metals such as gold or silver, but fiat money is based on faith and on the performance of politicians, bankers and central bankers.
Because today’s fiat money is not linked to physical reserves of gold and silver, it is becoming worth less with each passing month and risks becoming worthless should hyperinflation take hold.
If people lose faith in a nation's paper currency, the money will no longer hold value.
Throughout history most fiat currencies have not survived more than a few decades and have succumbed to hyperinflation.
The fiat currency or paper and digital based international monetary system has survived 40 years but is in terminal decline with many astute commentators now questioning whether it will survive the global debt crisis.
Gold’s role as a store of value and important monetary asset is being increasingly appreciated. Indeed, there are increasing calls for gold to again play a role in the global monetary system.
The President of the World Bank, Robert Zoellick, wrote in the Financial Times (‘The G20 must look beyond Bretton Woods II’ - November, 2010) that a new monetary system involving a basket of currencies “should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values”.
He also said that “although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.”
This was an important statement regarding gold especially as it came from the President of the World Bank, the head of one of the most powerful financial and monetary organizations in the world.
Jack Farchy wrote in the Financial Times today, “the return of gold as a prominent financial asset is without doubt the most important development in the bullion market today.”
It is also a very important development for currency markets and for the global financial and monetary system.
Ex Economics Editor of The Telegraph, Edmund Conway wrote over the weekend how “we've had the financial crisis that usually marks the beginning of the end of established monetary systems. And now we are seeing the debasement.”
He wrote that the rising gold price “reflects many factors . . . but chief among them is a diminishing faith in the ability of fiat currencies to maintain their value.”
“These bouts of debasement typically end in disaster, as faith is lost in the currency, inflation shoots through the roof and the economy collapses, after which politicians introduce a new, more credible system.”
http://www.goldcore.com/sites/default/files/editor/goldcore_bloomberg_chart3_15-08-11.png (http://www.goldcore.com/sites/default/files/editor/goldcore_bloomberg_chart3_15-08-11.png)
Conway warned that the “next stage of the crisis represents a crisis of confidence in the very system which, founded as it is on trust rather than measurable yardsticks, has no reliable, inbuilt way of righting itself.”
We have for many months now been warning of the real risk of an international monetary crisis and this risk looks more likely by the day.
While hyperinflation remains a worst case scenario, stagflation and a virulent bout of inflation looks almost certain in the coming months.
For the latest news and commentary on gold and financial markets follow us on Twitter (http://www.goldcore.com/sites/default/files/editor/goldcore_bloomberg_chart3_15-08-11.png).
SILVER
Silver is trading at $39.14/oz, €27.35/oz and £23.99/oz.
PLATINUM GROUP METALS
Platinum is trading at $1,789.00/oz, palladium at $754/oz and rhodium at $1,775/oz.
NEWS
(Financial Times)
Central banks polish gold’s shine - System of fiat money is 40 years old today (http://www.ft.com/intl/cms/s/0/7cf047b8-c70c-11e0-a9ef-00144feabdc0.html#axzz1V5FjKJN1)
(MarketWatch)
Gold edges higher amid weaker dollar (http://www.marketwatch.com/story/gold-edges-higher-amid-weaker-dollar-2011-08-15?reflink=MW_news_stmp)
(Reuters)
Spot gold falls 1 percent in third session of losses (http://www.reuters.com/article/2011/08/15/us-markets-precious-idUSTRE7781Q420110815)
(Bloomberg)
Gold Declines for Third Straight Day as Equity Rebound Trims Haven Demand (http://www.bloomberg.com/news/2011-08-15/gold-declines-for-third-straight-day-as-equity-rebound-trims-haven-demand.html)
COMMENTARY
(The Telegraph)
Abandoning the gold standard was a seminal moment, and one we're now all paying for (http://www.telegraph.co.uk/finance/comment/edmundconway/8699815/Abandoning-the-gold-standard-was-a-seminal-moment-and-one-were-now-all-paying-for.html)
(MarketWatch)
Commentary: What are all those gold-bashers saying now? (http://www.marketwatch.com/story/dont-let-anyone-tell-you-gold-isnt-golden-2011-08-12?pagenumber=2)
(London Bullion Market Association)
Brian Lucey: What do Academics Think They Know About Gold? (http://www.lbma.org.uk/assets/Alch6203Lucey.pdf)
(ZeroHedge)
At 50x Leverage And 2% Tier 1 Capital, Is SocGen Truly A Paragon Of Balance Sheet Invincibility? (http://www.zerohedge.com/news/50x-leverage-and-2-tier-1-capital-socgen-truly-paragon-balance-sheet-invincibility)
(Got Gold Report)
Gene Arensberg: Comex swap dealers cover gold shorts like a big dog (http://www.gotgoldreport.com/2011/08/comex-swap-dealers-cover-gold-shorts-like-a-big-dog.html)

[mick silver]

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