Bretton Woods Collapse: How the US Ended the Gold Link in 1971

Gold near $4,200, and the books still say $42.22 2026

Gold traded at about $4,182 an ounce on the morning of 13 October 2026, about a quarter below its January record. The US Treasury still carries its gold, about 261.5 million troy ounces, at the statutory price of $42.22 set in 1973, a book value of roughly $11 billion against a market value above $1 trillion. Some analysts argue a revaluation could come; on 14 October Kitco quoted UBP’s Peter Kinsella calling it an ‘upside risk’ for gold. No official proposal has been made.

IMF: the dollar’s reserve share edges down to 56.70% 2026

The IMF’s Currency Composition of Official Foreign Exchange Reserves showed the dollar’s share slipping again, as holdings of the euro and other currencies grew while dollar claims were largely unchanged. Fifty-five years after the gold link ended, the dollar remains by far the largest reserve currency, but well below the roughly 71% share it held around the euro’s launch in 1999.

55 years since the gold window closed 2026

The 55th anniversary of Nixon’s address drew commentary from economists and gold dealers alike, much of it framed around record gold buying by central banks, tariffs and the size of US government debt. Unlike 1971, there is no peg to defend: the dollar’s value is set in markets, and its reserve role rests on US financial markets rather than a claim on gold.

ECB: gold’s share of reserves passes US Treasuries Gold

The European Central Bank’s annual report found gold had risen to about 27% of global official reserves at the end of 2025, from about 20% a year earlier, while US Treasuries fell to about 22%. The report noted that much of the change reflected gold’s price surge, roughly 60% in 2025, and that central banks were still buying heavily. Many have cited the 2022 freezing of Russia’s reserves as a reason to hold more gold.

Gold sets a record above $5,500 Gold

Gold hit its all-time high in late January 2026 amid geopolitical tension, tariff threats, a weaker dollar and questions about the Federal Reserve’s independence. It then fell back, trading roughly 25% lower by October. The record was more than 150 times the $35 official price abandoned in 1971.

Calls for a ‘new Bretton Woods’ Crisis

As the financial crisis spread, European leaders including Nicolas Sarkozy and Gordon Brown called for a ‘new Bretton Woods’ to remake global financial rules. The first G20 leaders’ summit followed in Washington in November 2008. It produced new financial regulation and a larger IMF, not a return to fixed exchange rates.

The Plaza Accord shows managed floating Currencies

After the dollar’s steep rise in the early 1980s, the finance ministers of the United States, Japan, West Germany, France and the United Kingdom agreed to coordinate intervention to weaken it. It showed how the post-Bretton Woods world worked: no pegs, but governments still trying to steer exchange rates.

Gold peaks at $850 as inflation rages Gold

Released from its peg, gold rose through the 1970s as US inflation climbed and the dollar weakened. It touched $850 an ounce in January 1980. Paul Volcker, who had helped close the gold window as a Treasury official in 1971, became Fed chairman in 1979 and raised interest rates sharply to break inflation.

IMF Second Amendment takes effect Agreement

The amendment agreed in Jamaica entered into force, letting each member choose its own exchange-rate arrangement under IMF surveillance. It abolished the official price of gold and ended the obligation to use gold in transactions with the Fund, formally closing the Bretton Woods chapter.

The Jamaica Agreement Agreement

After two years of reform talks, IMF members accepted the reality of floating exchange rates. The agreement also provided for the sale of part of the IMF’s gold. It was ratified as the Second Amendment to the Articles of Agreement.

Americans may own gold again US policy

With gold no longer part of US monetary policy, Congress lifted the restrictions that had barred most Americans from holding gold bullion since Franklin Roosevelt’s 1933 order. By then the free-market price was far above the official $42.22.

The major currencies float Crisis

After another wave of selling of the dollar, European exchange markets closed in early March. The G10 approved an arrangement in which six European Community currencies moved together while floating against the dollar. When markets reopened on 19 March, the Bretton Woods fixed-rate system was over in practice.

Second devaluation: gold to $42.22 US policy

With exchange markets in Europe and Japan closed, the United States devalued the dollar a second time, by 10%, raising the official gold price from $38 to $42.22 an ounce. Japan let the yen float. Within a month nearly all major currencies were floating against the dollar.

Sterling floats Currencies

Speculation against the pound forced Britain to let it float, an early crack in the Smithsonian arrangement. During 1972 speculators pushed many European currencies to the tops of their wider bands, and the free-market price of gold climbed to about $60 an ounce.

The Smithsonian Agreement Agreement

The Group of Ten agreed new central rates. The dollar was devalued against gold, and the yen, mark and other currencies were revalued, for an average dollar devaluation of about 10.7% against the key currencies according to the Federal Reserve’s historians. Permitted fluctuations widened from 1% to 2.25% either side of the new rates, and the United States dropped its 10% import surcharge. Nixon hailed it as the most significant monetary agreement in the history of the world.

The Nixon Shock closes the gold window US policy

In an address titled ‘The Challenge of Peace’, Nixon announced his New Economic Policy. He directed Treasury Secretary John Connally to suspend the convertibility of the dollar into gold for foreign official holders, froze wages and prices for 90 days and imposed a 10% surcharge on dutiable imports. He said the aim was to create jobs, stop the rise in the cost of living and ‘protect the dollar from the attacks of international money speculators’.

The speech was popular at home and the stock market rose the next day. Abroad, it was a shock: allies had not been consulted, and the anchor of the postwar monetary system was gone.

The Camp David weekend US policy

Nixon took his economic team to Camp David in secret to settle a package. Arthur Burns argued against closing the gold window, fearing market chaos; Connally pressed for bold action. Unemployment was about 6% and inflation was running above 5%, with an election due in 1972.

The German mark floats Crisis

A wave of money fleeing the dollar forced the Bundesbank to stop buying dollars. West Germany and the Netherlands let their currencies float, and Switzerland and Austria revalued. It was an early sign that the parity system could not hold, and pressure moved to the US gold stock over the summer.

First allocation of SDRs Agreement

The IMF made its first allocation of Special Drawing Rights to member countries, to increase global reserves without relying on more US deficits or more gold. The idea was a direct response to the Triffin dilemma, but it came too late, and at too small a scale, to rescue the gold-dollar link.

The gold market splits in two Gold

After weeks of heavy private buying, the London gold market was closed and the central banks of the Gold Pool met in Washington. They agreed that official transactions would continue at $35 an ounce while the private price was left to find its own level. The peg survived only among central banks.

Sterling is devalued Currencies

The devaluation of the pound, the second-biggest reserve currency, shook confidence in the whole fixed-rate system and triggered a rush into gold that soon overwhelmed the Gold Pool.

De Gaulle attacks the dollar’s privilege Crisis

Charles de Gaulle used a press conference to criticise the dollar’s special role and call for an international system based on gold. France stepped up conversions of its dollar reserves into gold. Valéry Giscard d’Estaing, his finance minister, had earlier described the dollar’s role as an ‘exorbitant privilege’.

The London Gold Pool is formed Gold

The central banks of the United States, Britain, West Germany, France, Italy, Switzerland, the Netherlands and Belgium pooled gold to calm the London market. From March 1961 the US Treasury’s Exchange Stabilization Fund had also begun intervening in currency markets, and in March 1962 the Fed opened its first swap line, with the Bank of France.

Gold jumps to $40 in London Crisis

Ahead of the US presidential election, the London gold price briefly hit $40 an ounce. The same year Robert Triffin published Gold and the Dollar Crisis, warning that a system relying on growing US deficits to supply world reserves would eventually undermine confidence in the dollar’s gold value. By 1961 dollar claims on the United States exceeded its gold stock.

Bretton Woods begins working as designed Currencies

Major European countries made their currencies convertible for current-account transactions. The Federal Reserve’s historians date the fully operational Bretton Woods system from 1958, which means it worked as planned for barely 13 years.

The IMF opens for business Agreement

The International Monetary Fund began financial operations, overseeing members’ par values and lending to countries with temporary balance-of-payments problems. The World Bank made its first loan, to France, the same year.

IMF and World Bank come into existence Agreement

Once enough countries had ratified, the Articles of Agreement of the IMF and the International Bank for Reconstruction and Development took effect. The United States, the largest shareholder, had approved them through the Bretton Woods Agreements Act.

The Bretton Woods Conference Agreement

Delegates from 44 Allied nations spent three weeks designing the postwar monetary system. The American plan, led by Treasury official Harry Dexter White, prevailed over John Maynard Keynes’s more ambitious British design for an international clearing union. Currencies would hold fixed but adjustable values against the dollar, and the dollar would be convertible into gold at $35 an ounce for foreign official holders.

The $35 gold price is set US policy

The Gold Reserve Act transferred the Federal Reserve’s gold to the Treasury and let Roosevelt revalue it; he fixed the price at $35 an ounce, up from $20.67, effectively devaluing the dollar by about 41%. The $35 price became the anchor of the Bretton Woods system a decade later and lasted until 1971.