Upvote:2
As @justcal points out, the question is answered by Wikipedia:NixonShock (at least as simply and clearly as this question can be answered.)
"Because the U.S. owned over half the world's official gold reservesβ574 million ounces at the end of World War IIβthe system appeared secure.[5]"
@LarsBosteen supplements this with a chart of US gold reserves that also answers the question.
Those two sources answer the question as asked. But the issue wasn't simply gold reserves. The deeper issues involve some theory of macroeconomic theory and international monetary theory. Since such issues are still theory and not yet proven, the conclusions you reach will depend in part on the assumptions you make. A gold bug is going to reach different conclusions that I will. 1
Wikipedia goes on to explain that the issue wasn't gold reserves, it was changes in the gold reserves resulting from other countries withdrawing/threatening to withdraw from the Breton Woods agreement, which in turn was driven by perceptions of the US monetary policy.
As American economist Barry Eichengreen summarized: "It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries had to pony up $100 of actual goods in order to obtain one".[6] In February 1965 President Charles de Gaulle announced his intention to exchange its U.S. dollar reserves for gold at the official exchange rate.[7]
A few critical observations
"However, from 1950 to 1969, as Germany and Japan recovered, the US share of the world's economic output dropped significantly, from 35% to 27%. "
Foreign perception that US currency was weakly backed by gold, but foreign currency was strongly backed by gold. I can no longer remember the reference - I believe it was a biography of FDR, but allegedly, FDR set the ratio of dollars to gold oz to his lucky number. So long as foreign countries felt that the US didn't have to solidly back $1 of currency with $1 of gold; so long as they didn't trust the US, they were going to withdraw, which would undermine the system. The core of any monetary system is trust; the gold is merely a counter. If the international community trusts the banker, the backing commodity can be illusory or nonexistent. 2
The US had to act before foreign withdrawal from the system removed either the currency to back foreign currency or foreign trust in the system. International banking is also a version of one of those games where the only way to to win is to exit the game before the last person does.
Unfortunately in depth explanations require discussions of the theory of international economics and monetary theory. Neither of these two are universally agreed, and each is a book length topic.