What Is The Gold Standard?

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What Is The Gold Standard?

The Gold Standard is a monetary exercise that once enjoyed considerable success around the world but ceased to be used as the basis for economies during the Twentieth Century. In essence it relies on a fixed value or rate for gold which countries then balance their paper currencies against. Ironically, it was due to the introduction of paper money that the standard came into existence in the first place. The Industrial Revolution had brought prosperity to the UK and it is through trade that the Gold Standard has had a lasting effect. International trade was conducted through an exchange system known as the Classical Gold Standard which stipulated that any trade irregularities were to be balanced out by the exchange of real gold.

Introduction Of The Gold Standard

The method began to evolve towards the end of the Seventeenth Century to combat the problems that the introduction of paper money seemed to be causing. During the Napoleonic Wars the system settled into a definitive form and England became the first country to adopt the Gold Standard in 1821. The Industrial Revolution had brought prosperity to the UK and it is through trade that the Gold Standard has had a lasting effect. International trade was conducted through an exchange system known as the Classical Gold Standard which stipulated that any trade irregularities were to be balanced out by the exchange of real gold. During spells of surplus trade a country gained gold and during a deficit gold was forfeited. This caused countries to hoard gold bullion in times of plenty, a habit that still continues today with governments and investors alike who see gold as a commodity that can be used in times of financial stress.

Inflation

As every wise investor knows, gold defies inflation, a fact that saw economies benefit from the Gold Standard throughout the Nineteenth Century. Gold had been a precious metal of choice for centuries finding favour with adventurers and governments who relied on its stability as a commodity that held its value. Current investors are inclined to share their view and turn to the purchase of gold coins and ingots as a way of securely storing their funds in a reliable precious metal.

Investor’s Choice

Although the Gold Standard provided a certain reliability in trade and worked effectively against both inflation and deflation, countries that continued to pursue the policy with an inflexible approach found it actually caused instability. Britain wisely abandoned the Gold Standard in 1931. Gold coins and gold bullion have outlived the Gold Standard and as the most sought after commodity are still being accumulated in bank vaults across the world. With help from Indigo Precious Metals investors can discover which standard gold coins will provide the most attractive investment. Current investors are inclined to share their view and turn to the purchase of gold coins and ingots as a way of securely storing their funds in a reliable precious metal.

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