The Price of Gold

 As many of you know, America was on the gold standard following our victory at WWII when we made our currency the ONLY global reserve currency.  We promised to hold 1 ounce of gold for every $35 of paper money we created.  Nixon took us off that on August 15, 1971.

That’s an interesting date for me personally because I was 8 yrs old and we were in the process of moving to New Hope, MN.  We bought a very nice 4 bedroom, 2 bath colonial home on a cul-de-sac with a yard and a park behind that.  A great neighborhood to grow up in!

My parents purchased that house for $35,000 within weeks of Nixon leaving the gold standard.

So simple math would mean that if my parents had 1000 ounces of gold, they could have cashed that in and used it to purchase that home.

Today, gold is valued at just over $4,000 per ounce.  That same 1000 ounces of gold would now be worth $4,000,000 in US dollars.  The same house in New Hope just sold for about $400,000.

That’s what happens when governments create massive amounts of paper dollars backed only by faith and confidence.  The paper money becomes worth less.  When they finally get caught printing money to pay the interest on outstanding debt, it will one day become worthless.