gold standard


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

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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

While Ferraris remain the gold standard for many car collectors, vintage autos as a category declined 1 percent for the 12 months ended in March, according to the Knight Frank Luxury Investment Index. Jaclyn Gallucci, Fortune, "A Rare Ferrari 250 GTO May Fetch a Record $45 Million at Auction," 20 June 2018 After four seasons of dysfunction in Memphis, Gay was intrigued by the chance to play for the Spurs, who are considered the NBA’s gold standard. Jeff Mcdonald, San Antonio Express-News, "With series getting away from the Spurs, it is Gay’s time to shine," 18 Apr. 2018 Either way, despite its humble origins, the kiss has become the gold standard of love in Western culture. Sophia Benoit, GQ, "Kissing! Is! Overrated!," 25 May 2018 The euro was sold to voters as a form of gold standard with a commitment that no member would receive a bailout for its bad debts. The Editorial Board, WSJ, "The Costs of the Euro," 23 Nov. 2018 The bottom line: Microsoft’s flagship Surface Pro gets an extremely conservative update, but better battery life keeps it the gold standard of Windows hybrid PCs — for now., The Seattle Times, "Best tablets of 2018 (so far)," 24 Sep. 2018 And, of course, Differin gel is truly the gold standard for the treatment for overall acne and anti-aging. Chloe Metzger, Marie Claire, "I Asked 7 Derms Whether or Not They Actually Pop Their Pimples," 23 July 2018 The bottom line: Microsoft's flagship Surface Pro gets an extremely conservative update, but better battery life keeps it the gold standard of Windows hybrid PCs — for now. Hartford Courant,, "CNET: Best Tablets Of 2018," 14 June 2018 The glasses are handmade from acetate in Sweden and feature lenses from Carl Zeiss Vision (the gold standard of lenses) with 100 percent UV protection. Tyler Watamanuk, GQ, "Sun Buddies Is the Brand Behind Your Next Pair of Sunglasses," 19 June 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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Last Updated

11 Jan 2019

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The first known use of gold standard was in 1831

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gold standard


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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