“FORTUNE — Gold is down more than 25% from its recent highs, leading some observers to declare it on track for its biggest one-quarter decline since the Bretton Woods system collapsed in 1971.
This is a bit misleading: the average price of gold in 1971 was around $40 an ounce. The following year it was $58. By 1974, the year of the Arab oil embargo, gold averaged $154 an ounce. By taking the dollar off the gold standard in 1971, President Nixon kicked off one of the great risk markets in history, allowing speculators to flee from the occasionally useless (currency) to the utterly useless (gold) whenever the prices of really useful things (oil, food) went up.
The dollar collapsed after Nixon took it off the gold standard. Treasury Secretary John Connally cheered, saying the U.S. “took charge,” precipitating the dismembering of the Bretton Woods exchange rate system. Nixon went on national TV and said closing the gold window would stabilize and strengthen the dollar. The following day — a Monday — the Dow had its biggest one-day gain ever (33 points — those were the days!).
Fast-forward to today as the price of gold fades, even as global turmoil continues. Here are four news items to consider in evaluating gold’s decline…”Twitter