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

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The majority involve fewer than 100 subjects, and only a handful meet the gold standard of scientific testing, says Williams — that is, being double-blinded and placebo-controlled to squash the potential for bias. — Jolene Edgar, Allure, "The Truth About Growth Factors in Skin Care and Why They're Controversial," 2 Aug. 2018 The Marquette University Law School Poll has become the gold standard in Wisconsin politics, so candidates, their campaigns and anyone interested in politics perk up when a new one drops. — Daniel Bice, Milwaukee Journal Sentinel, "Bice: 6 things we learned from the Marquette University Law School Poll," 20 June 2018 The Hermitage Hotel For more than a century, the Hermitage has been the gold standard of Nashville accommodations. — Kristin Luna, Condé Nast Traveler, "12 Best Hotels in Nashville," 27 Feb. 2018 As far as public-sector work goes, federal positions are kind of the gold standard, in my opinion. — Celeste Katz, Glamour, "These Women Are Still Waiting for Their Paycheck Because of the Government Shutdown," 11 Jan. 2019 When OxyContin hit the market in 1996, it was considered the gold standard of painkillers. — Hayley Krischer, Marie Claire, "How Heroin Came for Middle-Class Moms," 20 Aug. 2018 One thing seems clear: chess and Go are no longer the gold standard for testing the capabilities of AIs. — Jennifer Ouellette, Ars Technica, "Move over AlphaGo: AlphaZero taught itself to play three different games," 6 Dec. 2018 The Home speaker has since joined the Chromecast as part of Google’s media and artificial intelligence platform for the home, while the Pixel line has arguably become the gold standard for flagship Android handsets. — Verge Staff, The Verge, "Google turns 20: how an internet search engine reshaped the world," 5 Sep. 2018 Hydroquinone has been the gold standard for lightening dark spots for the past 50 years. — Jenn Sinrich, SELF, "How Your Skin Changes in Your 30s—and What You Can Do About It," 20 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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19 Apr 2019

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The first known use of gold standard was in 1831

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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