Gold Standard

A gold standard is a system where every dollar in circulation can be exchanged for a set amount of gold

For centuries, the things people used as money had intrinsic value, such as precious metals like gold. In medieval Italy, giant wheels of parmesan cheese were once used as a store of value.

A gold standard is a system in which a country’s currency is pegged to, and can be converted into, a fixed amount of gold

In principle, this provides price stability as the amount of gold (and therefore the value of the currency) is limited, but also restricts the ability to modulate the money supply during economic downturns.

The value of a 400 oz gold bar hit $1M for the first time in 2024

On Aug. 16, 2024, the gold bar size often seen in movies hit $1M in value for the first time when the price of gold reached $2,500 per troy ounce. A data visualization shows what other gold bar sizes are worth and compares them to the size of an iPhone.

Fiat money is a currency with no intrinsic, tangible value

Unlike the gold standard, where a nation's currency is linked to the value of gold, fiat money gets its power from the public's trust in its value.

The US dollar became the world's reserve currency, backed by gold, after 44 nations gathered in Bretton Woods, New Hampshire, in 1944 with the intention of rebuilding the global economy.

Many bitcoin enthusiasts have compared the cryptocurrency to digital gold

Gold is valued for its stability and reliability, serving as a hedge against inflation and economic uncertainty. Bitcoin shares both of these characteristics, but also provides near-instant liquidity and isn’t subject to government regulation.

A startup is trying to create the diamond equivalent of the gold standard

It's called the Diamond Standard Co, and it uses an algorithm to assign standard values to a variety off small diamonds, grouping them together into individual coins. Historically, diamonds haven't been able to be classified as commodities or standardized like gold because they aren't uniform—factors such as clarity, cut, color, and carat size significantly influence the value of a diamond.

Fort Knox was originally built to be a secure facility for the US Treasury's gold reserves back when the US still operated under the gold standard, a system in which a country's currency is pegged to, and can be converted into, a fixed amount of gold.

The global economy runs on US dollars

Nearly 90% of international trade in 2019 was processed in US dollars. It's not only the most circulated currency in the world but also considered one of the most stable.

A ‘gold bug’ is a person who is bullish on gold as an investment

"Gold bugs" often argue that fiat money allows governments to engage in financially reckless behavior (think: chronic borrowing). They also say the price of gold rises as the value of fiat currency falls.