Fifty years ago this Sunday, the gold market was completely transformed in only a matter of minutes after then-president Richard Nixon decoupled the U.S. dollar from the precious metal.
Back then, I was a dishwasher and at $0.90 an hour, I could have bought an ounce of gold every week.
I invested instead in Jimmy Hendrix 8 track tapes.
A few years later I was making gold jewelry and fussing about paying $425 an ounce for gold casting grain.
I guess I should have kept the casting grain for today.Gold still remains relevant 50 years after Nixon ended Bretton Woods Agreement
Before Nixon's announcement, the 1944 Bretton Woods Agreement allowed central banks and foreign governments to redeem their U.S. dollar treasuries for gold.
While not an official gold standard, the Bretton Woods Agreement made the U.S. dollar the world's reserve currency, and gold was pegged to the U.S. dollar at $35 an ounce.
However, in the starting in the mid-1965, because of rising inflation, nations worldwide were quickly redeeming their U.S. dollars for gold. When the Bretton Woods agreement was signed, the U.S. controlled about two-thirds of the world's gold supply.
"The U.S. had 20,000 tones of gold, and it fell to 8,000 tonnes. The U.S. gold reserves were going down way too fast, so Nixon had to step in and do something," said George Milling-Stanley, chief gold strategist at State Street Global Advisors, in a recent interview with Kitco News.
"In the last 50 years from 1971 to date on a compound annual growth rate basis, gold has given you a capital appreciation of close to 8% a year," he said. "Which is not too shabby for something that doesn't pay a coupon like a bond or doesn't pay a dividend like a stock."
In more recent history, Milling-Stanley said in the last 20 years, gold has seen its value increase seven-fold, solidifying its role as an essential global asset.