Dollars originally were redeemable in gold. But because of inflation of the money supply (i.e. creating more dollars) the US didn't have enough gold to pay their outstanding debt (i.e. the dollars out there being held by other countries).
So Nixon was forced to sever the dollar's tie with gold in 1971. At that point the dollar is a fully flexible (or fiat) currency.
Look at the price of gold in that chart since 1971.
That's not the value of gold going up. It's the value of the dollar going down.
Gold supply is relatively stable. It takes investment and time to mine new gold, so only a small amount is introduced into the economy each year.
New dollars are added to the economy at a terrifying rate. Every fiat currency in the history of mankind has always gone to zero.
Here is a historical chart of the price of gold (in dollars) since 1833.
http://www.nma.org/pdf/gold/his_gold_prices.pdf
Dollars originally were redeemable in gold. But because of inflation of the money supply (i.e. creating more dollars) the US didn't have enough gold to pay their outstanding debt (i.e. the dollars out there being held by other countries).
So Nixon was forced to sever the dollar's tie with gold in 1971. At that point the dollar is a fully flexible (or fiat) currency.
Look at the price of gold in that chart since 1971.
That's not the value of gold going up. It's the value of the dollar going down.
Gold supply is relatively stable. It takes investment and time to mine new gold, so only a small amount is introduced into the economy each year.
New dollars are added to the economy at a terrifying rate. Every fiat currency in the history of mankind has always gone to zero.