There was a time when currency came in the form of silver and gold coins. Later, in the 1800’s, once paper currencies became the norm, the value of the paper was still backed by precious metal in the form of gold in countries agreeing to this standard- the gold standard. The gold standard included the agreement between the countries adhering to it that currency in circulation within countries accepting the standard could be exchanged for their face value in gold. England adopted the gold standard in 1817, and the US officially did so in 1900 with the passage of the Gold Standard Act.
Currency prices in the United States were fixed to the price of gold at $20.67 from 1834 (even before the passage of the above mentioned act) to 1933. The gold standard was abandoned in 1933 when President Roosevelt “nationalised” privately held gold. Debts around the world were henceforth largely paid in American dollars. But there continued to be a sort of “gold standard” in place for nations wishing to redeem gold for their US dollars. The post-war world needed assurance that US currency was safe and stable, and between 1946 and 1971 this “gold window” allowed countries to redeem one ounce of gold for the fixed rate of $35 USD. This ended in 1971, with President Nixon’s closing of the “gold window.”
Having the price of gold fixed to currencies insured relative economic stability in countries adhering to the standard. Economic disturbances- production increases, inflation, increase in demand- in one country were in a sense buffered in other countries, keeping prices and economies stable throughout the world. Interestingly, during World War I when countries abandoned the gold standard, inflation became rampant. This was by design- without the international gold standard governments are able to manipulate their countries’ economies- for better or for worse. Again in 1971, when the US officially abandoned gold standard, we saw rampant inflation. Of course there are seemingly infinite other factors influencing the world economy today that would take lifetimes of study and writing to explain, especially in our ultra-complex, globalised, digital world. But suffice it to say that currencies backed by gold or silver created more stable, self-regulating, and prosperous economies around the world.
Today, January 1st, 2017, the current price for an ounce of gold is about $1,150 USD, an increase of over $1,100 from its 1971 fixed price. The price of gold has been higher, and of course much lower, but generally rising over most of that time to its present cost. Ups and downs occur, but gold remains a tangible, valuable asset that should not be overlooked.
For current prices, making purchases of metals, and a great radio program, visit the Patriot Trading Group. They are an honest, hard-working company who will answer your questions and help you make the right purchase.