THE financial reports regularly tell us that gold ''went up'' by so many dollars. But this is misleading. What they really mean is that the US dollar was devalued by that much.
Gold is the stable money. The US dollar, which has no intrinsic value, is the unstable medium of exchange. Contrary to popular belief, gold's value never varies. It is worth the same as it always was. However, its theoretical price is always quoted in USdollars as demanded by the International Monetary Fund.
When there is a change in the relationship, it is never in gold but in the number of dollars it takes to buy an ounce of it.
I have little confidence in the dollar because I have seen it devalued so many times. I well remember when President Franklin D. Roosevelt devalued it by 59 per cent on January 15, 1934.
The price of gold had been arbitrarily set at $20.67 for 96 years. But the Gold Reserve Act passed by Congress gave Roosevelt the power to devalue the dollar by any amount he deemed appropriate, as long as it was less than 60 per cent.
Roosevelt pounced at once and devalued the dollar by increasing the purchase price to $35.00 per ounce. People whose life savings were in dollars lost 59 per cent at a stroke. Companies which were owed dollars could collect only 41 per cent.
