Exactly 50 years has passed since the US Government famously suspended the convertibility of US dollars into gold on 15 August 1971 in a speech announced by then US president Richard Nixon.
This convertibility of US dollars into gold applied to US dollars held by foreign governments and foreign central banks, which based on the rules of the Bretton Woods monetary system, allowed them to legally show up anytime at the ‘gold window’ of the US Treasury and exchange their excess US dollars for physical US Treasury gold.
There will be much written this month about the 50th anniversary of the closure of the US gold window, but less so about what exactly triggered it and why the timing had to be 15 August.
So without further ado, here is why, and it all revolves around the British ambassador to the US. the 3rd Earl of Cromer, a.k.a. George Rowland Baring, showing up at the US Treasury offices in Washington D.C. on 12 August 1971 and demanding that US dollars held by Britain be converted into gold. mehr hier