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Fall of the Global Gold Exchange Standard and the Formation of the Contemporary Free Gold Market

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  • Dariusz Eligiusz Staszczak

Abstract

Purpose: The purpose of this paper is an explanation of the fall of the global gold exchange standard in the beginning of XXth century. Moreover, reasons of the cancelations of the U.S. dollar convertibility into gold according to the fixed parity in 1933 and 1971 are purposes of this paper. The final cancellation of the U.S. dollar gold convertibility was related to the establishment of the free gold market in 1968-1974. A lack of the gold standard and the free gold market are characteristic features of the contemporary world market system. Design / Methodology / Approach: The design is finding the historical reasons of the fall of the global gold exchange standard and of the establishment of the free gold market in 1968-1974. The research method is a describing political-economic analysis based on statistical data. The approach covers the most important historical time periods connected with the transformation of the global market system including the changing role of the gold. Findings: This paper analyses reasons of the fall of the gold exchange standard from the beginning of the XXth century to the establishment of the free gold market in 1968-1974. Author considers this problem including changes of the global political-economic situation in the analyzed period. The First World War and the recession (the great depression) in 1929-1933 disturbed the gold exchange standard and promoted the growing importance of fiat money in circulation. Moreover, a fall of the Bretton Woods agreement, i.e., of the re-establishments of the limited dollar convertibility into the gold, promoted the establishment of the U.S. free gold market. Practical Implications: The practical result of this historical research is the background of the formation of the contemporary gold market. A knowledge of the analyzed facts can be helpful for long-term investments in gold. Originality/Value: Original research paper.

Suggested Citation

  • Dariusz Eligiusz Staszczak, 2021. "Fall of the Global Gold Exchange Standard and the Formation of the Contemporary Free Gold Market," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 341-347.
    • Handle: RePEc:ers:journl:v:xxiv:y:2021:i:special1-part1:p:341-347
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    References listed on IDEAS

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    1. Peter Coffey, 1974. "The World Monetary Crisis," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-02315-8, December.
    2. Eichengreen, Barry & Flandreau, Marc, 2009. "The rise and fall of the dollar (or when did the dollar replace sterling as the leading reserve currency?)," European Review of Economic History, Cambridge University Press, vol. 13(3), pages 377-411, December.
    3. Barry Eichengreen & Marc Flandreau, 2008. "The Rise and Fall of the Dollar, or When Did the Dollar Replace Sterling as the Leading International Currency?," NBER Working Papers 14154, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Gold exchange standard; the global system; Nixon shock; the free gold market.;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E39 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Other

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