The Day the Dollar Left Gold
In 1971, something very important happened. On August 15th, the US President at that time, Richard Nixon, made a big decision. Until that day, anyone who had US Dollars could exchange them for gold. Countries like France and others trusted the Dollar because they knew they could get gold in return. The price of gold was fixed at around $42 per ounce. But on that day, Nixon announced that the US would no longer give gold in exchange for dollars. People were told it was a temporary move. But even now, in 2025, that system has never come back.
Gold’s Price Shoots Up
Once the gold backing was removed from the Dollar, something strange happened. Gold, which was earlier controlled at around $30–$40, started to rise in price. By 1981, the price had gone above $800. That’s almost 20 times growth in just 10 years. It was one of the fastest rises in any asset class. The reason was simple—earlier the price was artificially kept low. Once it was free, it found its true value in the market.
Governments Start Selling Gold
When the price of gold shot up, many countries like the UK and Canada decided to sell their gold reserves. They believed the prices had gone too high. So, central banks across the world made a plan. They said they would sell some gold every month for many years. Because of this, the market always expected more gold to come, and the prices were kept under pressure. This started a 20-year long period where gold did not perform well, from 1981 to 2001. During this time, the gold price fell from $800 to just $250.
A New Gold Rally Begins
After reaching a low of $250, gold started to rise again. This second big rally happened between 2001 and 2011. The price went from $250 to nearly $2000. After that, there was a correction and prices came down again to around $1000 by 2015. Since then, we have been seeing the third wave of gold rally. In this wave, gold has already increased around three times.
What History Tells Us About Gold
In the first rally, gold increased 20 times. In the second, it rose 8 times. In the current phase, it’s already 3 times higher than the bottom. It is hard to predict how far this current rally will go. But history clearly shows that gold always finds a way to rise. And this is only the price of gold in US Dollars. If we look at the price in Indian Rupees, it has grown even more because of the falling value of the rupee.
Gold’s Journey is Far from Over
This story tells us how gold has reacted to global changes over time. Removing the gold backing from the dollar had a deep impact. Gold has shown that it is not just a metal—it is a store of value. Knowing this history helps us understand why gold still remains such a strong part of investment around the world.
On The Momentum Podcast this week
In Episode 2 of The Momentum Podcast, Rajnish, a seasoned investor from Pune, shares his shift from traditional investing to momentum strategies. He talks about avoiding costly mistakes, the real estate vs equity debate, and his approach to gold investing. A must-listen for young investors! Now streaming.
