Information About Gold

Gold purity is measured in karat, pure gold is 24 karat.

Gold can be alloyed with other metals to make it harder or to change it's color. Copper, silver, nickel (white gold), etc

The Latin name for Gold is AURUM ( Au ) which means morning blush.

Gold is a pure metal, it does not rust or tarnish, however if you find 10k jewelry it will have a slight tarnish on it, thats because it only contains 41% pure gold.

Gold is one of the heaviest metals. It is twice as heavy as lead and 19 times heavier than water.

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24k 100% 1000
22k 91.7% 917
18k 75% 750
15k 62.50% 625
14k 58.33% 583
10k 41.67% 417
9k 37.50% 375

The Gold and Gold Bullion Standards

The first modern international monetary system was the gold standard. Operating during the late 19th and early 20th century, the gold standard provided for the free circulation between nations of gold coins of standard specification. Under the system, gold was the only standard of value.

The advantages of the system lay in its stabilizing influence. A nation that exported more than it imported would receive gold in payment of the balance; such an influx of gold raised prices, and thus lowered the value of the domestic currency. Higher prices resulted in decreasing the demand for exports, an outflow of gold to pay for the now relatively cheap imports, and a return to the original price level.

A major defect in such a system was its inherent lack of liquidity; the world's supply of money would necessarily be limited by the world's supply of gold. Moreover, any unusual increase in the supply of gold, such as the discovery of a rich lode, would cause prices to rise abruptly. For these reasons and others, the international gold standard broke down in 1914.

During the 1920s the gold standard was replaced by the gold bullion standard, under which nations no longer minted gold coins but backed their currencies with gold bullion and agreed to buy and sell the bullion at a fixed price. This system, too, was abandoned in the 1930s.

The Gold-Exchange System

In the decades following World War II, international trade was conducted according to the gold-exchange standard. Under such a system, nations fix the value of their currencies not with respect to gold, but to some foreign currency, which is in turn fixed to and redeemable in gold. Most nations fixed their currencies to the U.S. dollar and retained dollar reserves in the United States, which was known as the "key currency" country.

At the Bretton Woods international conference in 1944, a system of fixed exchange rates was adopted, and the International Monetary Fund (IMF) was created with the task of maintaining stable exchange rates on a global level.

The Two-Tier System

During the 1960s, as U.S. commitments abroad drew gold reserves from the nation, confidence in the dollar weakened, leading some dollar-holding countries and speculators to seek exchange of their dollars for gold.
A severe drain on U.S. gold reserves developed and, in order to correct the situation, the so-called two-tier system was created in 1968. In the official tier, consisting of central bank gold traders, the value of gold was set at $35 an ounce, and gold payments to noncentral bankers were prohibited. In the free-market tier, consisting of all nongovernmental gold traders, gold was completely demonetized, with its price set by supply and demand.

Gold and the U.S. dollar remained the major reserve assets for the world's central banks, although Special Drawing Rights were created in the late 1960s as a new reserve currency. Despite such measures, the drain on U.S. gold reserves continued into the 1970s, and in 1971 the United States was forced to abandon gold convertibility, leaving the world without a single, unified international monetary system.

Floating Exchange Rates and Recent Developments

Widespread inflation after the United States abandoned gold convertibility forced the IMF to agree (1976) on a system of floating exchange rates, by which the gold standard became obsolete and the values of various currencies were to be determined by the market. In the late 20th cent., the Japanese yen and the German Deutschmark strengthened and became increasingly important in international financial markets, while the U.S. dollar, although still the most important national currency, weakened with respect to them and diminished in importance.

The euro was introduced in financial markets in 1999 as replacement for the currencies (including the Deutschmark) of 11 countries belonging to the European Union; it will begin circulating in 2002. The euro replaced the European Currency Unit, which had become the second most commonly used currency after the dollar in the primary international bond market.
Many large companies use the euro rather than the dollar in bond trading, with the goal of receiving a better exchange rate.