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gold standard

noun

Definition of gold standard

1 : a monetary standard under which the basic unit of currency is defined by a stated quantity of gold and which is usually characterized by the coinage and circulation of gold, unrestricted convertibility of other money into gold, and the free export and import of gold for settling of international obligations
2 : benchmark sense 1a
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Examples of gold standard in a Sentence

the gold standard for accurate experimental procedures is the double-blind medication trial

Recent Examples on the Web

 The first great age of globalisation, which began in the late 19th century, was built atop the gold standard. — The Economist, "What comes after Bretton Woods II?," 15 Aug. 2019 Until 1944, when the gold standard was established (at Bretton Woods in New Hampshire!), the country was pretty agrarian and designed by the Brits as a place for fun. — Scott Haas, BostonGlobe.com, "How to afford a trip to expensive Switzerland," 6 Aug. 2019 For starters, Cozens said the U.S. dollar has lost 86 percent of its buying power after the country went off the last vestiges of the gold standard. — Aldo Svaldi, The Denver Post, "Glint Pay promises consumers an easier way to transact in gold," 29 July 2019 Still, the gold standard of home run races remains the duel between McGwire and Sosa. — Paul Sullivan, chicagotribune.com, "Can Christian Yelich and Cody Bellinger replicate the Mark McGwire-Sammy Sosa home run duel of 1998?," 25 July 2019 Jordan Bell spent his first two seasons playing for the NBA’s gold standard in Golden State. — Jace Frederick, Twin Cities, "Jordan Bell spent two years learning from Draymond Green. Now, he’ll try to bring those lessons to the Timberwolves.," 23 July 2019 But the gold standard to study sleep is using physiology, Franken says. — National Geographic, "These slumbering fish may offer clues to the origins of sleep," 10 July 2019 To prove his point, Sisti is using Disaronno, an Italian brand whose square-cut Murano bottle is for many the most well known, if not the gold standard, among amaretto liqueurs. — Erik Maza, Town & Country, "Can Liqueurs Be the Next Big Thing in Food-Cocktail Pairings?," 14 Jan. 2019 But while 40 shades is on its way to becoming the gold standard for foundations, brow products still have a long way to go. — Leah Prinzivalli, Allure, "Redheads On Reddit Are Using Lip Liner as Eyebrow Pencils Because They Can't Find Shades That Match Their Hair," 31 July 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'gold standard.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of gold standard

1831, in the meaning defined at sense 1

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More Definitions for gold standard

gold standard

noun

Financial Definition of gold standard

What It Is

The gold standard is a monetary system in which the representative currency is based on a fixed amount of gold held by the central government.

How It Works

Paper currency is actually a "legal note," i.e. a debt between the currency holder and the government.  In theory, currency represents the obligation to make a payment of the stated amount when presented to the government.  When the gold standard was in place, an individual could present a $10 bill to a federal bank and receive $10 worth of gold in return. Gold was used as a base, because it was durable, rare, and almost universally valued.

The price of gold became a barometer for the underlying value of an economy.  But because gold is a tangible asset, the price of gold can rise and fall rapidly. It's also subject to speculation, discovery and theft.   As a result, the value of currency based on gold depends on the value of gold.

In the last century, the world's economies grew too quickly to be accurately represented by the world's reserves of gold. Therefore, gold standards have been abandoned by almost all economies. The United States abandoned the gold standard in 1971.

Why It Matters

While the gold standard regulates the value of exchanges throughout the economy, it also limits a central government's ability to make monetary adjustments in the current global economy.

After the abandonment of the gold standard, governments gained more ability to affect economies through monetary policy. Monetary policy is contingent upon the central government's ability to adjust an economy's demand for money through interest rates and the supply of currency.  This is especially important during times of emergency such as war or natural disaster.

Source: Investing Answers

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