In Gold / Glossary

A Sound-Money Calculator

Glossary of sound money

Short definitions. The numbers live on the year pages.

Debasement

The reduction of a currency's value by expanding its supply. Once done by clipping coins; now done by keystroke. The cause of which inflation is the symptom.

Fiat currency

Money backed by nothing but decree (fiat: "let it be done"). Every currency on this site has been fiat since August 15, 1971.

Sound money

Money whose supply cannot be expanded at will — historically gold and silver. The ruler this site measures with.

Gold standard

A monetary system in which the currency is defined as a fixed weight of gold. The US dollar was 1/20.67 oz (1913–33), then 1/35 oz (1934–71).

Gold window

The Bretton Woods redemption mechanism: foreign central banks could exchange dollars for gold at $35/oz. Closed "temporarily" by Nixon in 1971; never reopened.

Bretton Woods

The 1944 agreement that made the $35-gold dollar the anchor of the post-war monetary order, with other currencies pegged to it. Ended in 1971.

Executive Order 6102

Roosevelt's 1933 order outlawing private gold ownership in the US, with coin surrendered at $20.67/oz — one year before the price was reset to $35.

London Gold Pool

Eight central banks (1961–68) selling gold to defend the $35 price. Its collapse in March 1968 created the two-tier market and foreshadowed 1971.

CPI

Consumer Price Index — the official story of inflation. Measures a basket of consumer prices, not the currency; systematically the smallest of the three rulers on this site.

M2 / M3

Money-supply measures (US M2; Australian M3 broad money) — cash, deposits and near-money. The middle ruler: what was actually created.

Spot price

The current market price for immediate delivery of a metal, per troy ounce. In Gold refreshes gold, silver and platinum spot every five minutes.

Troy ounce

The bullion weight unit: 31.1035 grams. All gold weights on this site are troy ounces.

Purchasing power

What money actually buys. Measured in gold rather than a price index, the US dollar's purchasing power has fallen roughly 99% since 1971.

Hard money

Money that is costly to produce and cannot be conjured — gold being the archetype. The destination of the flight visible in the M2-to-gold gap.

Two-tier gold market

The 1968–71 arrangement after the Gold Pool failed: $35 for official settlement, a free market price for everyone else. The gap was the truth leaking out.

AUD float

December 1983: the Hawke–Keating government let the Australian dollar trade freely. From then on, the A$ gold price is a daily market verdict on the currency.

See also: methodology & sources · FAQ · 1971.