Gold Has Outperformed Stocks Since The Gold Standard Ended On August 15th, 1971

Gold Has Outperformed Stocks Since The Gold Standard Ended On August 15th, 1971 | Chart of the Week

Since the Gold Standard ended on August 15th, 1971, gold has returned 4800% (Annual 7.84%) S&P 500 has returned 4000% (Annual 7.45%).

The gold standard was a monetary system in which a country’s currency was backed by a fixed amount of gold. Under this system, individuals and other countries could exchange their currency for gold at a fixed rate. For governments, however, the gold standard constrained governments’ ability to increase the money supply, which made it difficult to stimulate economic growth during times of economic hardship.

In the mid-20th century, the Bretton Woods system was established, which pegged the value of the US dollar to gold but allowed other currencies to float freely. However, this system eventually collapsed in the 1970s due to economic and political pressures, leading to the complete abandonment of the gold standard by most countries. Today, most countries use fiat money, which is not backed by a commodity like gold but is instead backed by the government’s ability to guarantee its value, basically, backed by nothing.

DID YOU KNOW… that Canada went off the gold standard in 1929. However, the export of gold was not officially banned until October 31, 1931 by an Order-in-Council.

Sources: YCharts, BMG Group Inc.