The US adopted the gold standard in 1834 with gold fixed at a price of $20.67 per troy ounce. This Dollar standard survived until 1933 when President Franklin Roosevelt devalued the Dollar to $35 per troy ounce of gold in 1933. In 1971, after foreign governments demanded gold in exchange for their Federal Reserve Notes, draining the US of its gold bullion, the US finally ended its tie to the gold standard. Without a gold standard and the Federal Reserve free to print money and expand credit, the United States saw a surge in inflation and gold prices rose dramatically. By 1980, gold had risen to $850, twenty-four times its price from just nine years earlier. After that bout of extreme inflation, the US Central Banks went into an anti-inflation mindset that drove the rate of price inflation down from 15% to near zero and gold fell by 70% to $250 as of 1999. But memories are short and the Federal Reserve started worrying about defilation in the recession and market crash of 2000-2003. The Fed again started expanding credit, creating a huge real estate bubble. When the bubble burst, the Fed attempted to fix the problem with an even greater expansion of credit. As a result of this record breaking credit expansion, gold has continued to climb ever higher setting new highs year to year, with the latest being $1265 in June vs the American dollar. Gold continues higher across the board versus all major currencies.
We here at calichebahada.com expect this to continue for some time.