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Gold

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

gold

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in the UK and many other countries, gold coins formed the basis of the domestic MONEY SUPPLY, but gold has now been replaced by banknotes and brass and nickel coins as the cash component of the money supply.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.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

gold

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.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
He said it was a golden opportunity for all overseas Pakistanis to deposit their cash money in Pakistani banks to avail four percent tax as announced by the Government.
It will be a golden opportunity for Madhya Pradesh and other states too," Chouhan told media here.
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Coronation Street missed a golden opportunity to educate its viewers.
Melbourne:aIreland have a "golden opportunity" to get the better of the Wallabies in Melbourne's Lansdowne Cup on Saturday, according to Australia old boy Paddy Howard, who warns that the Irish should beware of his country's unfamiliar line-up.
If, by offering products an enemy needs at a low price or of apparent excellent quality, the enemy buys items from one of our allies or--even better--from one of our own lords, this is a situation of golden opportunity. This may be created by appealing to the greed, arrogance, or ignorance of the enemy or by bribes or payments to leaders and lords and generals of the enemy, though the latter should be done if at all possible through intermediaries and agents.
THE 6f handicap was decimated by non-runners and Awwal Malika was gifted a golden opportunity to finally get off the mark after a string of nearmisses.
Cardiff Blues supremo Peter Thomas today described the proposed groundshare with Cardiff City club as a 'golden opportunity.'
The Italian has been second best to younger team-mate Alonso at Renault but has a golden opportunity to step up as team leader in 2007.
Back in the '80s GM lost a golden opportunity in the Golden State, where Toyota had carried out a virtual case study in TPS implementation and how to nurture such a culture.
The open letter by the nineteen priests is a golden opportunity for us to put into practice the directives of the Apostle Paul: "Proclaim the word; be persistent whether it is convenient or inconvenient; convince, reprimand, encourage all through patience and teaching" (2 Timothy 4:2).