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A particularly valuable precious metal. Gold is an element with the atomic number 79. It is used for jewelry, electronics and for other purposes. Historically, gold was used in many cultures as the basis for currency, but this is no longer the case. Investments in gold are often used as a hedge against inflation because it tends to maintain its value over time.


a mineral that is used both as an industrial base metal and for ornamental purposes, and is held by governments as part of their stock of INTERNATIONAL RESERVE assets in order to finance balance of payments deficits. Formerly, in the UK and many other countries, gold coins formed the basis of the domestic MONEY SUPPLY, but gold has now been replaced by banknotes and brass and nickel coins as the cash component of the money supply. See BULLION MARKET, WORLD GOLD COUNCIL.


a monetary ASSET that is held by countries as part of their INTERNATIONAL RESERVES and used to finance BALANCE OF PAYMENTS deficits.

Formerly, many countries operated a GOLD STANDARD system under which gold was used as the basis of a country's domestic MONEY SUPPLY as well as being used to finance payments deficits. Gradually, however, the ‘pure’ gold standard gave way to domestic monetary systems based on paper money and other metallic coins and, internationally, the gold-exchange standard in which foreign currencies such as sterling and the American dollar were used alongside gold as reserve assets.

In 1935 the price of gold was ‘fixed’ at $35 per fine ounce by the USA, Britain and France as part of a monetary pact between the three countries. This price was then ‘officially’ adopted by member countries of the INTERNATIONAL MONETARY FUND on its formation in 1947; gold was used as the NUMERAIRE of the Fund's fixed exchange-rate system in setting par values for members’ currencies, and members were required to pay one quarter of their ‘quota subscriptions to the Fund in gold. Gold continued to serve as the linchpin of the IMF system, and its ‘official’ price remained pegged at $35 per ounce, down to 1971, when the Fund's fixed exchange-rate system gave way to floating exchange rates. Countries had, however, found it increasingly difficult to hold the price of gold at the $35 per ounce level as world demand for gold as an industrial metal and for ornamental purposes continued to expand. In 1961 a ‘gold pool’ was set up to regulate dealings in the metal, but in 1968 Fund members bowed to the inevitable and a ‘two-tier’ price structure was established; gold continued to be priced at $35 per ounce for ‘official’ transactions between countries’ central banks and the Fund, while the ‘free’ market price of gold was left to be determined by market forces.

In 1972, gold was dropped as the numeraire of the Fund and replaced by the SPECIAL DRAWING RIGHT unit, the Fund's existing gold holdings were sold off, and members were required to subscribe their quotas in a non-gold form. Outside the Fund, many countries have sold off part of their gold reserves, with the UK being particularly active in 1999, having taken the decision to reduce its gold holdings to around 8% of its total reserves. Overall, gold accounts for only some 0.3% of total international reserves. The market price of gold has fallen substantially over the past decade. In 1989 the price of gold averaged around $850 per ounce. Following UK gold sales in 1999, the price of gold at one point fell as low as $250 per ounce. However, despite the determination of the USA and a number of other major gold holders to put a moratorium on gold sales, the price of gold has remained depressed - currently (April 2005), it is around $430 per ounce.

The attractiveness of gold as a reserve asset is underpinned by the fact that, unlike national paper currencies (which are intrinsically worthless), it has a value in exchange as a commodity related to its use as an industrial base metal and for ornamental purposes. Gold holdings, however, suffer from the disadvantage that, compared with other assets such as STOCKS and SHARES, they yield no interest return.

References in periodicals archive ?
WELL READ Race fan Hugh TOP FORM Chloe, Helen and Rachel Lowry at Down Royal yesterday VIEW BEAUTY Grandstand spot POT LUCK Winners Alyson McIlroy and Stella Murtuagh PICK ME A WINNER Mirror leprechaun Laura with John and Martina as young Shaun tries his luck in the pot of gold yesterday
But one thing's for sure - no one has found that pot of gold yet," he said.
There's no pot of gold,'' said Steve Lopes, USC's senior associate athletic director.
Jack will be climbing his beanstalk in search of a pot of gold near Coventry from the end of this month.
A charitable trust found a pounds 4,345 pot of gold at the end of the rainbow when a North East baker gave away bread in Newcastle.
DINING OUT: In a town where legions of serious vegans are constantly on the lookout for food that meets their needs, Real Food Daily and its organic vegetarian cooking may seem like the proverbial pot of gold.
VETERAN Robins' winger Scott Murray will give City's Academy greater preference over any Chinese pot of gold.
Wheelchair racer Chantal Petitclerc of Canada brought home the biggest pot of gold, winning championships in the 100-meter, 200-meter, 400-meter, 800-meter and 1500-meter races.
SO now we know what's at the end of the rainbow - and it's not a pot of gold.
MICHAEL GOMEZ is reaching out for his pot of gold after throwing away everything "through being an absolute idiot".
The revelations and drama play out rather predictably and the laughs are about as subtle as the monster truck show that's the pot of gold at the end of the jaunt to Reno.
PUNTERS will chase a pounds 5million pot of gold when tackling next Saturday's scoop6, boosted by a rollover for the 10th consecutive week.