However, the US can’t pretend forever the price of gold is $42.22.
I would therefore like to discuss the monetary question and also the question of gold—not the role of gold because we could debate that in vain and we know that we are not in agreement; but there is the question of the price of gold and we can no longer continue to go on pretending that an ounce of gold will always be worth thirty-eight dollars when it is now worth one hundred and six dollars.
On August 15, 1971, the President of the United States Richard Nixon announced the convertibility of US dollars for gold would be temporarily suspended. In particular France was not amused by the fact the US broke its promise; which was that the US dollar was as good as gold.
After the anchor in the international monetary system was removed in ‘71 a diplomatic battle ensued about the value of currencies (and gold). The US wanted to cap the value of gold, while Europe wanted to revalue gold. This period is very interesting because I suspect it gave birth to the euro.
I will resume publishing diplomatic documents from this era to find out exactly how the rest of the world (the Arabs, China, Japan, Russia and Europe) reacted and what measures were taken when the US broke its promise. If we figure out what happened in the past we have a better perspective on the future – so we can know more accurate when the US is forced to accept the true value of gold.
Previously I’ve posted: