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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in the UK and many other countries, gold coins formed the basis of the domestic MONEY SUPPLY, but gold has now been replaced by banknotes and brass and nickel coins as the cash component of the money supply.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 ?
Middleton's mom Carole Middleton's younger brother punched his wife, Julie-Ann Goldsmith in the face after another drinking session at a charity.
They both got out of the taxi and he (Mr Shepherd) describes Mrs Goldsmith slapping her husband to the face.
After admitting a charge of assault by beating, Goldsmith now faces questions over whether he poses a danger to his wife.
After two years in Borneo, Goldsmith spent another travelling the "hippie trail" across southern Asia.
14) In making his case, Goldsmith organizes his text around a series of compelling case studies that demonstrate how various institutions checked executive power in the years following 9/11.
During his 25 years as a member of ASME, Goldsmith has served in a number of leadership positions, including a term on the Board of Governors.
He is survived by his wife of thirty eight years, Elizabeth, and his children, son Kenneth and his wife Jennifer Goldsmith, daughter Lauren Goldsmith and her husband Thomas Tero, daughter Sharon Zelonish and her husband Edward, stepdaughter Megan Munzert, stepson Sean Munzert, and nine grandchildren.
Mr Goldsmith said: "If the only way a business can stay afloat is by engaging in immoral or unethical behaviour, that business should change or go out of business.
Prosecutor Richard Parsell told how Goldsmith hit Mr Partlett several times with the hammer before being disarmed, then stabbed him to his left armpit with the knife.
Targeted But Mr Goldsmith said the story, first broadcast by Channel 4 News, was "sleazy journalism" and he had been targeted because he fought a tight contest in a highly visible seat.
November 7 - Lord Goldsmith warns then-foreign secretary Jack Straw he should not expect it will be "all right on the night" even after a new UN resolution is passed.
The Sunday Mirror revealed in 2006 how Goldsmith - worth pounds 300million - was having a fling with heiress Alice Rothschild.