The years following the Great Depression brought the leading nations of the world together to bring order to the economic landscape and in 1944 the USA officially became the world’s sole economic superpower.  A year later after the Bretton Woods Agreements were signed the USA was recognized as the world’s first military/nuclear superpower.
Under Bretton Woods, the US dollar would remain convertible to gold at a fixed ratio of $35.00 per ounce and all other world currencies would be convertible to the US dollar at fixed exchange rates, thus making the US dollar the official link between gold and every other national currency.

In the 1960s the US was firmly engaged with the war in Vietnam while at the same time expanding its social programs at home without additional tax increases.  As a result the USA experienced large and growing budget deficits and a loss of confidence in the debt obligations of the US government.  As the US dollar was still fixed to the gold rate of $35.00, foreign governments began demanding conversion of their US dollar holdings to gold.

In 1971, refusing to honour any further conversions, President, Richard Nixon broke the terms of Bretton Woods which had the effect of making the US dollar itself the world reserve currency, instead of a proxy for a fixed amount of gold.

Although reneging on their 1944 pledge to operate as a stable core to the world’s financial system by linking the US dollar to gold it had the result of preserving the government’s gold reserves.   Consumers paid the price with a decade-long global economic depression along with a strong price inflation era resulting in 15%+ interest rates.  Many bankruptcies occurred and by 1982 the world adjusted to floating currency exchange rates.  Since America’s break with the gold standard, real estate and financial assets have seen huge price increases.

Again we are faced with the same scenario; the USA is actively engaged in escalating foreign entanglement coupled with growing budget deficits along with a global loss of confidence in the debt obligations of the US government.  Unable to demand gold from the US government, foreign investors are exchanging US dollars for other currencies or investments including gold on the open market. 

In 1971 gold rose from $35.00 to $800.00 per ounce in 1980, which had the effect of cushioning its owners from the effects of price inflation.

Are there any parallels to where we are today?