A Dollar-Driven Rally

The price of gold continues to surge as the US prints money to stave off economic hardship. Schalk Louw explains what this means for investors – and South Africa.

- Schalk Louw

For thousands of years, the glamour of gold has attracted and captivated humans and even caused conflict. But during the 19th century, the role of gold changed dramatically by becoming the world’s official means of payment – not necessarily via direct trade, but in the form of “promises”. The gold standard basically meant that you could redeem this promise in the form of a note at any central bank for its weight in gold, which, at the time, was linked to a specific currency.

The role of gold in developed economies changed with the outbreak of World War II. By the end of the war, the Bretton Woods monetary system was implemented, which came to an end in 1971 when the US decided to no longer convert dollars to gold. The fiat currency has since replaced the gold standard.