Gold Standard

The gold standard is the use of gold as the official value base for a country’s money. If country can exchange its money for gold then it is using the gold standard. During the 1900’s this system was prevalent in North America, but now it no longer holds true. Britain and the United states dropped the gold standard system in 1931 and 1971 respectively, but both countries retain large amounts of gold because it is a commodity recognized worldwide. President Nixon closed access to gold for citizens in the seventies and this severed the tie permanently between gold and the current currency. The result is the floating currency system which we observe today. Now, the price of gold fluctuates following the demand for the metal. The gold standard is apparently resistant to inflation, and debt and credit increases. The gold standard was meant to create currency certainty, to create sound credit, and to encourage lending. Despite what the gold standard was initially supposed to do, the countries adhering to the system still experienced depression and debt. Today the gold standard is no longer used by any countries as it has been replaced with fiat currency. Private companies however still follow some of the principles of the gold standard where they supply digital gold currency based on gold grams.