What is the Gold Standard? History and Relevance Today

The gold standard is one of the most important concepts in economic history — and highly relevant for understanding today's monetary system.

What Was the Gold Standard?

Under the classical gold standard (1870–1914), every currency unit in circulation was backed by a fixed amount of gold. Central banks had to exchange gold for paper money on demand.

The End of Bretton Woods (1971)

In 1971, US President Nixon unilaterally ended gold convertibility — the so-called Nixon Shock. Since then we have lived in a system of pure fiat currencies without gold backing.

What Does This Mean for Investors Today?

Without gold backing, central banks can create unlimited money. This explains the structural loss of purchasing power of all fiat currencies since 1971 — and why gold as a store of value is back in focus.