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

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

Behind the rhetoric is the battle between those who want a strong currency—the gold standard or the euro—and those who want a weak currency, in Bryan’s case silver as well as gold, in Italy’s the lira. James Mackintosh, WSJ, "Italy’s Old Bonds Hold Clues to Its Euro Future," 31 May 2018 The Olympics for any serious athlete is always the goal or gold standard. NBC News, "Nathan Chen shares a tool 3 Olympic medalists had: A costume by Vera Wang," 8 Feb. 2018 Animal tests are considered the gold standard for determining how toxic a substance might be to people. Eric Boodman, STAT, "Computers may surpass rabbits and rodents for some chemical safety tests," 11 July 2018 Happily, Armor Lux, the Breton company considered the gold standard in striped shirts, has cooked up a special treat. Hayley Phelan, New York Times, "How to Be a Poolside Pinup," 27 June 2018 Mammograms, the gold standard for breast cancer detection, come with the risk of false-positive results — that is, incorrectly identifying a cancer that isn’t really there. Orly Nadell Farber, STAT, "New approach to breast cancer screening — tailoring guidelines for each patient — may save lives and money, study says," 5 July 2018 Perhaps the gold standard for this subcategory (and maybe journalism books overall) at the moment. Rachel King, Fortune, "Eight Business Books That Are Actually Great Summer Beach Reads," 26 June 2018 In fact, Sax considers DEET the gold standard against Aedes mosquitoes that can transmit a host of diseases (including Zika) as well as deer ticks, which often strike now through the end of summer. Kari Molvar, Vogue, "The Best Bug Sprays for a Bite-Proof Summer, According to the Pros," 18 June 2018 To Denino and his fans, social media, once hailed as the gold standard of authenticity, now appears artificial. Adrian Chen, The New Yorker, "Ice Poseidon’s Lucrative, Stressful Life as a Live Streamer," 8 Dec. 2014

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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Last Updated

18 Oct 2018

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The first known use of gold standard was in 1831

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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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