For years, many countries have subscribed to the Gold Standard for their monetary policies. When it comes to stability and growth, there’s no better symbol for it than the lustrous properties of gold. How has this monetary policy played a part in the history of countries that have become economic powerhouses? Why did they start to move towards fiat currency during the 20th century?
No other business would know more about this system than those who trade in Gold themselves. That’s why APM Bullion, one of the lead gold dealers in Dubai, is here to tell you more about this monetary standard. In this article, we’ll explain what the gold standard is and how it was used for both monetary exchange and value. Along with that, we’ll explain how gold holds such a commanding role within the economies of various countries.
What Is The Gold Standard?
Amidst the history of civilization, Gold has been held in high regard thanks to its rarity and widespread usage in multiple industries and traditions. Up until the start of the 20th century, countries and territories handled large transactions through exchanges in solid gold. This created a system wherein countries would have fluctuating gold reserves depending on whether they had surpluses in trade or imports to pay for.
Paper money eventually became popular but not without its fair share of issues during its first years. Due to this, some governments elected to implement a gold standard wherein citizens can convert paper money to a specified amount of gold. Due to that, the value of paper money was backed by whatever the current value of gold was.
Although countries typically focused on a single precious metal such as Gold, other territories had a bimetallic standard where the value of silver and gold are set in a specific ratio. The United States once ran on a bimetallic system but a series of different policies eventually pushed the country towards following a more traditional gold standard system.
The Advantages Of The Gold Standard
The gold standard was once thought of as a relatively easy to understand system for both the public and the government. There’s a sense of confidence that’s instilled with gold because of its historical value. It’s also a safeguard against inflation as the volume of all sorts of monetary types are backed by gold.
Autonomy is also another positive aspect of the gold standard, requiring little to no intervention from government powers. However, it also takes the cooperation of several countries for it to work alongside optimal economic conditions. In exchange, countries that were on a gold standard saw price stability and even better rates of capital exchange between all participating countries.
The End Of The Gold Standard
The gold standard system saw its end around the time the First World War ended and many countries saw their finances deteriorate. The expenses of such a wide-scale conflict and the resulting industrial deficit and unemployment rates plunged multiple countries into debt. Economic downturns such as the Great Depression further exacerbated issues and found the world switching over to fiat currency systems.
Breaking away from Gold allowed for governments to have a larger degree of control over the economy, adjusting the volume of currencies and interest rates instead of waiting for volatility to play its part. Even with such a move, private investors still believe in the value of gold and the relationship between the value of the U.S. Dollar and Gold still exist. Where one value falls, the other rises as we’ve seen with the depreciating dollar and the rise of gold these past few years.
Securing Economic Safety and Stability With Gold Bullion Investments!
Investing in Gold is still a wise choice for many investors who want to protect the value of their wealth from further economic downturns ahead. Physical Bullion remains the most reliable of all gold products and demand for these products have risen for all sorts of purposes. Gold Bullion in Dubai has skyrocketed and clients from all over the world have been clamoring to have their own piece of this newly-found wealth.
APM Bullion is here to provide our clients with the best bullion products around for their investment goals. Our team of expert bullion dealers constitute one of the best firms when it comes to gold dealers in Dubai. Visit our website and see for yourself how Rakesh Rajdev and our company can help you to meet your financial goals ahead!