Comments on: A History of the Gold Standard

By: Ned S

Ned S — Thu, 30 Jul 2009 03:44:31 +0000

Why trust the bullion that a country holds to back their fiat currency when the country won't part with it when asked? Case in point: Nixon, USA, 1971. That episode must have killed off any lingering illusions the world may have still had regarding honour amongst thieves surely?

By: David

David — Thu, 30 Jul 2009 00:02:39 +0000

I am not so sure why everyone is so fixed and narrow minded towards the Gold Standard? After all, past governments, (such as Britain and America), who have used the Gold Standard, have also used the "Silver Standard" as well. This is historical, so the fuss about there not being enough gold around the world to meet international goverment needs should not really be an issue. In fact, historically, silver has been in some instances much more valuable and precious than gold, due to its scarcity and probable difficulty in refining it.

Therefore, it is possible and plausible for governments to hold both gold and silver reserves, and have their paper currencies linked to them. This ancient solution would make it easier for governments to plug any blackholes within their Fiat currencies especially those of poorer nations. This historical companion to the gold standard should make it much more attractive, as silver stocks above ground are diminishing, and especially when mines are selling silver at about producton price.

I have heard it falsely said, that gold is not consumed by industry, when silver is. Well, this is ridiculous, for if we take the time to think on what other uses gold has, we all know that gold is used in electronics, decorating, electro-plating, utensils, shielding and for medical therapeutic use, just as well as what silver is. Yet, somehow, the domestic consumption of Au, does not affect nor reflect on the market spot price of gold. (The same can also be said for silver).

Nonetheless, silver has both intrinsic value and beauty on a similar par as with gold, and yet it is an historical compliment to the Gold Standard and to governments holding gold reserves.

By: Harshad Malkan

Harshad Malkan — Wed, 18 Mar 2009 14:26:09 +0000

Differing definitions of gold standard
If the monetary authority holds sufficient gold to convert all circulating money, then this is known as a 100% reserve gold standard, or a full gold standard. In some cases it is referred to as the Gold Specie Standard to more easily separate it from the other forms of gold standard that have existed at various times. The 100% reserve standard is generally considered unworkable because the quantity of gold in the world is too small to sustain current worldwide economic activity and the "right" quantity of money (i.e. one that avoids either inflation or deflation) is not a fixed quantity, but varies continuously with the level of commercial activity. The currencies or banknotes having Gold standard were the old German Reichsmarks, Yugoslav dinars, Turkish liras, Brazilian cruzeiros, Croatian dinars, Polish złoty, Argentine peso leys,Vietnam Dongs, Angola Kwanzas reajastodos, Zairean zaires and Bolivian Bolivianos as their high denominations inflation money adhere to world standard currencies and acceptable by banks internationally indefinetely.

In an international gold-standard system, which may exist in the absence of any internal gold standard, gold or a currency that is convertible into gold at a fixed price is used as a means of making international payments. Under such a system, when exchange rates rise above or fall below the fixed mint rate by more than the cost of shipping gold from one country to another, large inflows or outflows occur until the rates return to the official level. International gold standards often limit which entities have the right to redeem currency for gold. Under the Bretton Woods system, these were called "SDRs" for Special Drawing Rights.