Peter Schiff is pointing to a 55-year-old decision as the root of the dollar's current problems. On August 15, 1971, President Nixon closed the gold window, ending the dollar's convertibility into gold at $35 per ounce. Schiff calls that move a default, not a technical fix, and argues it explains why gold now trades at roughly $4,418 and why the dollar is sliding.
The 1971 decision that won't go away
Nixon called the suspension temporary, but it has lasted more than half a century. The numbers are stark: a 1971 dollar buys about 12 cents of goods today, and consumer prices have climbed 718% since August 1971. Schiff sees this as a broken promise that keeps compounding. He's not the first to say it, but he's saying it loudly as gold hits fresh records.
Gold's rally and the dollar's slip
Gold closed Monday at $4,418, up 0.94%, about 126 times the 1971 price. The dollar slipped to a three-month low against its peers the same day. Yet the Federal Reserve's broad dollar index has only lost 1.8% over the past year. That's a slow bleed, not a collapse. Still, Schiff claims the world is de-dollarizing and leaving the dollar standard behind.
Central banks flip-flop on gold
Central banks bought 289 tonnes of gold in the second quarter, 62% more than a year earlier, according to the World Gold Council. That follows a first quarter where buying collapsed to just 56.5 tonnes. Meanwhile, the dollar's share of world reserves actually rose to 57.13% in the first quarter, up from 56.42% three months earlier. The euro holds 20.03% of reserves; the renminbi sits under 2%. So the picture is mixed. Jeff Currie argues gold loses its biggest bid when central banks turn into forced sellers, and he holds a long-run target of $10,000 per ounce.
Debt nears $40 trillion
Federal debt hit $39.93 trillion on August 13, roughly $65 billion from the $40 trillion mark. Schiff expects households to feel the impact first: imports get pricier, living standards fall. That's the mechanism he says ties the 1971 default to today's inflation and currency weakness.
The unresolved question is whether central bank gold buying and dollar reserve trends cross. One quarter doesn't settle it, but the gap between gold's surge and the dollar's slow slide is worth watching.
