Word: goldings
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Dates: during 1960-1969
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Charles de Gaulle, who has long since learned how to use economics as a political weapon, last week hit the U.S. where it hurt: right in its gold reserves. In so doing, he sent shock waves throughout the international monetary system, of which the U.S. is the mainstay, and revived doubts about the system's basic strength and resiliency...
...French Ministry of Finance revealed that, following De Gaulle's order, France will convert at least $300 million of its $1.3 billion hoard of dollars into gold-in addition to the $400 million to $500 million it routinely cashes in each year. De Gaulle thereby served notice that he intended not only to cause mischief for the American economic colossus, but to test the money system in its global entirety. The move was important not so much for its size as for the furor it caused and the specter it roused of what would happen if other dollar holders...
Firm Stand. The French action sent speculators off on a gold-buying binge, upset markets and confidence around the world. The price of gold on the London exchange soared to $35.20 an ounce, the highest since the Cuban missile crisis. As gold rose, the value of paper money decreased. The dollar declined on markets in Germany and Switzerland, and Britain's beleaguered pound fell fractionally. This week the Bank of France was expected to move to ease tension on the gold markets-but that would not alter the long-term French determination to put pressure...
...calm fears about the dollar's stability, President Johnson hastened plans to reduce the amount of gold that the U.S. must legally hold to back its dollars, thus making more gold available for international dealings. The Treasury later confirmed that Congress will be asked to approve the change, issued an unusual public statement that tried to allay fears about the dollar...
...speculation against the basic price of gold," warned the Treasury, "would inevitably end on the losing side." A change in the gold-backing law, it said, "will be appropriate in order both to assure the availability of credit in a growing domestic economy and to relieve any doubt that the United States gold supply stands firmly behind the dollar in international markets at the immutable price of $35." In short, the U.S. has no intention of devaluing the dollar...