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Why did the United States stop backing the dollar with gold in 1971?
Research question: Why did the United States stop backing the US dollar with gold in 1971?
The records show that Nixon closed the gold window on August 15, 1971, ending the dollar's backing by gold 18. The dollar had become increasingly overvalued in the 1960s due to a negative balance of payments, public debt from the Vietnam War, and monetary inflation by the Federal Reserve 312. By 1971, US gold reserves had fallen to $12 billion, while foreign central banks held more than $50 billion in dollars they could have demanded in gold 14. Pressure peaked in May 1971, when West Germany left Bretton Woods, and in August, when Britain requested $3 billion in gold from Fort Knox 56. Nixon publicly justified the move by blaming international speculators who he said had waged a war against the dollar 10.
Checked 2026-10-18. Only documented and supported facts are used.
Dig deeper on this questionSources
[1] documented
The United States stopped backing the dollar with gold when President Richard Nixon closed the gold window on August 15, 1971.
"That regime ended with the closing by President Richard Nixon of the gold window on 15 August 1971."The Bretton Woods International Monetary System: An Historical Overview (1992)
[2] documented
The US administration under Nixon decided in 1971 to decouple the US dollar from gold by terminating the Bretton Woods Agreement.
"1971 was selected because it was the year the US administration (Nixon) decided that the US dollar would no longer be linked to gold and this was accomplished by terminating the Bretton Woods Agreement."Did Gold Remain Relevant in the Post-1971 International Monetary System? (2012)
[3] supported
The U.S. dollar became increasingly overvalued in the 1960s due to a negative balance of payments, growing public debt from the Vietnam War, and monetary inflation by the Federal Reserve.
"Furthermore, a negative balance of payments , growing public debt incurred to fund U.S. involvement in the Vietnam War , and monetary inflation by the Federal Reserve caused the dollar to become increasingly overvalued in the 1960s."Nixon shock - Wikipedia
[4] supported
By 1966, non-U.S. central banks held $14 billion in U.S. dollars, while the United States had only $13.2 billion in gold reserves, with only $3.2 billion available to cover foreign holdings.
"By 1966, non-U.S. central banks held $14 billion in U.S. dollars, while the United States had only $13.2 billion in gold reserves, of which only $3.2 billion was available to cover foreign holdings."Nixon shock - Wikipedia
[5] supported
In May 1971, West Germany left the Bretton Woods system because it was unwilling to sell further Deutschmarks for U.S. dollars.
"In May 1971, West Germany left the Bretton Woods system, unwilling to sell further Deutschmarks for U.S. dollars."Nixon shock - Wikipedia
[6] supported
On August 11, 1971, Britain requested that $3 billion in gold be moved from Fort Knox to the Federal Reserve in New York, signaling intense pressure on the U.S. to leave the Bretton Woods system.
"On August 11, Britain requested $3 billion in gold be moved from Fort Knox to the Federal Reserve in New York."Nixon shock - Wikipedia
[7] supported
Paul Volcker stated that if Britain, a founder of the system, was going to take gold for their dollars, it was clear the game was over.
""If the British, who had founded the system with us, and who had fought so hard to defend their own currency, were going to take gold for their dollars, it was clear the game was indeed over.""Nixon shock - Wikipedia
[8] supported
Nixon ordered Treasury Secretary Connally to temporarily suspend the convertibility of the dollar into gold or other reserve assets, justified as a defense of the dollar against speculators.
"Ich habe Finanzminister Connally angewiesen, vorübergehend die Konvertibilität des Dollar in Gold oder andere Reservemittel auszusetzen"Nixon-Schock
[9] supported
A surplus of US dollars built up abroad from foreign aid, military spending, and foreign investment, so over time there were more foreign-held dollars than the US had gold.
"A surplus of US dollars built up abroad from foreign aid, military spending, and foreign investment. Over time there were more foreign-held dollars than the United States had gold."What Happened in 1971? The Nixon Shock and the Gold Standard
[10] supported
Nixon justified the move by blaming international money speculators, who he said had launched a war against the dollar in the preceding weeks.
"In den letzten Wochen haben die Spekulanten einen Krieg mit allen Mitteln gegen den amerikanischen Dollar entfacht."Nixon-Schock
[11] supported
Runs on gold through the 1960s showed the $35 official gold price was hard to defend.
"Runs on gold through the 1960s showed the $35 price was hard to defend."What Happened in 1971? The Nixon Shock and the Gold Standard
[12] supported
Persistent US trade balance deficits kept increasing American foreign debt, which undermined the Bretton Woods gold-backed system.
"Aufgrund ständiger Handelsbilanzdefizite der Vereinigten Staaten stieg die Auslandsverschuldung immer weiter an."Nixon-Schock
[13] supported
The first big test came in October 1960, when a run in the London gold market pushed the gold price to $40 an ounce, and the London Gold Pool was formed in November 1961 to keep the price at $35.
"The first big test came on October 20, 1960, when a run in the London gold market sent the price to $40 an ounce. In response, the London Gold Pool was formed on November 1, 1961."What Happened in 1971? The Nixon Shock and the Gold Standard
[14] supported
By 1971 US gold reserves had fallen to 12 billion dollars, while foreign central banks held more than 50 billion dollars in dollar reserves that they could have demanded in gold.
"sanken die US-Goldreserven auf 12 Mrd. $. [ 4 ] Die Zentralbanken der anderen Bretton-Woods-Staaten verfügten 1971 über Dollarreserven von mehr als 50 Mrd. $."Nixon-Schock
[15] supported
The Bretton Woods system could only work as long as member states were willing to hold large dollar reserves without exchanging them for gold, and they eventually stopped accumulating more dollars.
"Die Bretton-Woods-Staaten gaben letztlich die Verteidigung des festen Wechselkurses auf, weil sie nicht immer höhere Dollarbestände anhäufen wollten."Nixon-Schock