Rickards: Trump & The Fate Of The Dollar
Authored by James Rickards via DailyReckoning.com,
What is the Mar-a-Lago Accord? And what would a Mar-a-Lago Accord mean for the value of the U.S. dollar?
We begin our analysis with the name itself. Mar-a-Lago Accord is an echo of the three major international currency accords since the original Bretton Woods Agreements reached in 1944.
Accords Through The Years
The first was the Smithsonian Agreement in December 1971. This came in the aftermath of President Nixon’s decision on August 15, 1971, to end the convertibility of U.S. dollars into physical gold by U.S. trading partners at the fixed rate of $35.00 per ounce. The major countries in the global system (U.S., UK, France, Germany, Italy, Japan, Netherlands, Sweden, Switzerland, Canada, Belgium, and Netherlands) met at the Smithsonian Institution in Washington DC to decide how to reopen the gold window.
The main U.S. goal was to devalue the dollar. In the end, the price of gold was increased by 8.5% to $38.00 per ounce (revalued to $42.22 per ounce in 1973), which equaled a 7.9% dollar devaluation. Other currencies were revalued against the dollar, including a 16.9% upward ...
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