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The Other Currency

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In Brief...

Throughout the ages, gold has captivated societies, and in a post-gold-standard world, many feel that with the instability that occurred in the first decade of the 21st century, some form of the gold standard should be brought back. Gold has often been thought of in relation to the U.S. dollar, mainly because it is usually priced in U.S. dollars, and there is a rough inverse correlation between the USD and gold prices. In the same way one could exchange U.S. dollars for Japanese yen, a paper currency can also be exchanged for gold. Gold has a price and that price will fluctuate relative to other forms of exchange, such as the U.S. dollar, the euro or the Japanese yen. Gold and the U.S. Dollar Gold and the USD have always had an interesting relationship. The U.S. dollar's relationship to gold prices can be linked to the Bretton Woods System, where international settlements were made in U.S. dollars and the U.S. government promised to redeem dollars at a fixed gold rate. While the Bretton Woods system was dissolved in 1971, the U.S. remains a global power in 2010; therefore, when gold is discussed, talk of the U.S. dollar usually ensues.. Gold, for example, is impacted by far more than just inflation, the U.S. dollar or war.

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