TIMELINE - Gold's history as a currency standard

Mon Nov 8, 2010 4:11pm IST

Gold bars are pictured at the Ginza Tanaka store in Tokyo October 23, 2009. REUTERS/Issei Kato/Files

Gold bars are pictured at the Ginza Tanaka store in Tokyo October 23, 2009.

Credit: Reuters/Issei Kato/Files

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Reuters - Leading economies should consider readopting a modified global gold standard to guide currency movements, said World Bank president Robert Zoellick.

Following is a timeline on gold's use as medium of exchange.

2010: Zoellick proposes return to a gold standard, arguing that a replacement is needed for the current system of floating exchange rates that has been in place since 1971 breakdown of the post-war Bretton Woods System, in which the dollar and other currencies were tied to the value of gold.

2002: The Gold Institute Board of Directors votes to dissolve.

1999: The euro, a pan-European currency is introduced, backed by a new European Central Bank holding 15 percent of its reserves in gold.

1990: United States became the world's second largest gold producing nation

1987: World stock markets suffer sharp reversal on October 19; volatile investment markets increase gold trading activity. The World Gold Council is established to sustain and develop demand from endusers of gold

1981: Treasury Secretary Donald Regan announces the formation of a Gold Commission "to access and make recommendations with regard to the policy of the U.S. government concerning the role of gold in domestic and international monetary systems"

1980: Gold reaches intra-day historic high of $870 on January 21 in New York and by year end closes at $591.

1978: The weak U.S. dollar propels interest in gold. By act of Congress, the U.S. abolishes the official price of gold. Member governments are free to buy and sell gold in private markets.

1975: Trading in gold for future delivery begins on New York's Commodity Exchange and on Chicago's International Monetary Market and Board of Trade.

1974: Americans permitted to own gold, other than just jewellery.

1973: On February 13, the United States, devalues the dollar again and announces it will raise the official dollar price of gold to $42.22 per fine troy ounce. Dollar-selling continues and finally all currencies are allowed to "float" freely without regard to the price of gold.

By June, the market price for gold in London has risen to more than $120 per ounce. Japan lifts prohibition on imports of gold.

1971: "Nixon Shock" U.S. President Nixon ends dollar's link to gold established under Bretton Woods Agreement. Dollar became the sole backing of currencies and a reserve currency for the member states.

On Aug 15, U.S. terminates all gold sales or purchases, thereby ending conversion of foreign officially held dollars into gold.

In December, under the Smithsonian Agreement signed in Washington, U.S. devalues the dollar by raising the official dollar price of gold to $38 per fine troy ounce.

1968: London Gold Market closes for two weeks after a sudden surge in the demand for gold. The governors in the gold pool announce they will no longer buy and sell gold in the private market.

A two-tier pricing system emerges: official transactions between monetary authorities are to be conducted at an unchanged price of $35 per fine troy ounce and other transactions are to be conducted at a fluctuating free-market price.

U.S. Mint terminates policy of buying gold from and selling gold to those licensed by the U.S. Treasury to hold gold.

Gold backing of Federal Reserve Notes is eliminated.

1961: Americans are forbidden to own gold abroad as well as at home.

The central banks of Belgium, France, Italy, the Netherlands, Switzerland, West Germany, the United Kingdom and the United States form the London Gold Pool and agree to buy and sell at $35.0875 per ounce.

1954: London gold market, closed early in World War Two, reopens.

1945: Gold backing of Federal Reserve Notes is reduced by 25.5 percent.

1944: The Bretton Woods agreement, ratified by the U.S. Congress in 1945, establishes a gold exchange standard and two new international organizations, the International Monetary Fund (IMF) and the World Bank.

The new standard involves setting par values for currencies in terms of gold and the obligation of member countries to convert foreign official holdings of their currencies into gold at those par values.

The system was set up to help rebuild the international economy as World War Two still raged. The main features were for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value (plus or minus one percent in terms of gold).

1942: President Franklin D. Roosevelt issues a presidential edict closing all U.S. gold mines.

1934: The Gold Reserve Act of 1934 gives the government the permanent title to all monetary gold and halts the minting of gold coins.

It also allows gold certificates to be held only by the Federal Reserve Banks, putting the U.S. on a limited gold bullion standard, under which redemption in gold is restricted to dollars held by foreign central banks and licensed private users.

President Roosevelt devalues the dollar by increasing the price of gold to $35 per ounce.

1933: To alleviate the banking panic, President Franklin D. Roosevelt prohibits private holdings of all gold coins, bullion and certificates.

1931: Great Britain abandons the gold bullion standard.

1929: Great Depression, Wall Street Crash.

1925: Great Britain returns to a gold bullion standard, with currency redeemable for 400-ounce gold bullion bars but no circulation of gold coins.

1914-1919: A strict gold standard is suspended by several countries, including United States and Great Britain during World War I.

1913: Federal Reserve Act specifies that Federal Reserve Notes be backed 40 percent in gold.

1900: The Gold Standard Act places the United States officially on the gold standard, committing the United States to maintain a fixed exchange rate in relation to other countries on the gold standard. This lasted till 1919, when World War I forced both the United States and Britain to suspend it.

1873: As a result of ongoing revisions to minting and coinage laws, silver is eliminated as a standard of value and the United States goes on an unofficial gold standard.

1848: California Gold Rush triggered when John Marshall found flakes of gold while building a sawmill.

1837: The weight of gold in the U.S. dollar is lessened to 23.22 grains so that one fine troy ounce of gold is valued at $20.67.

1817: Great Britain introduces the sovereign, a small gold coin valued at one pound sterling

1816: Great Britain officially ties the pound to a specific quantity of gold at which British currency is convertible.

1804-1828: North Carolina supplied all the domestic gold coined by the U.S Mint in Philadelphia for currency.

1803: Gold is discovered at Little Meadow Creek, North Carolina, sparking the first U.S gold rush.

1799: A 17-pound gold nugget is found in Cabarrus County, North Carolina, the first documented gold discovery in United States.

1792: The Coinage Act places the United States on a bimetallic silver-gold standard and defines the U.S. dollar as equivalent to 24.75 grains of fine gold and 371.25 grains of fine silver.

1787: First U.S gold coin is struck by Ephraim Brasher, a goldsmith

1700: Gold was discovered in Brazil, which became the largest producer of gold by 1720, with nearly two-thirds of the world's output.

Isaac Newton, as Master of the Mint, fixes the price of gold in England at 84 shillings, 11.5 pence per troy ounce. The Royal Commission, comprising of Newton, John Locke and Lord Somers recommends a recall of all old currency, issuance of new specie with gold/silver ratio of 16-to-1.

The gold price thus established for over 200 years

1377: England shifts to a monetary system based on gold and silver

1284: England issues its first major gold coin, the florin. This was followed shortly by the noble and later by the angel, crown and guinea.

1284: Venice introduces the gold ducat, which soon becomes the most popular coin in the world and remains so for more than five centuries.

1066 A.D: With the Norman Conquest, a metallic currency standard is finally re-established in England with the introduction of a system of pounds, shillings and pence. The pound is literally a pound of sterling silver.

50 BCE: Romans began issuing a gold coin called the aureus.

560: The first coins made purely from gold are minted in Lydia, a kingdom of Asia Minor.

1091: Little squares of gold are legalized in China as a form of money

1500: Gold became recognized as a standard medium of exchange for international trade as the immense gold-bearing regions of Nubia made Egypt a wealthy nation. Ancient Egypt left behind a rich legacy of gold.

Sources: National Mining Association and World Gold Council

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(Compiled by Lavrina Lee)

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