Gold standard

A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. Three types can be distinguished: specie, bullion, and exchange.

Most nations abandoned the gold standard as the basis of their monetary systems at some point in the 20th century, although many hold substantial gold reserves.

An estimated total of 174,100 tonnes of gold have been mined in human history, according to GFMS as of 2012. This is roughly equivalent to 5.6 billion troy ounces or, in terms of volume, about 9,261 cubic metres (327,000 cu ft), or a cube 21 metres (69 ft) on a side. There are varying estimates of the total volume of gold mined. One reason for the variance is that gold has been mined for thousands of years. Another reason is that some nations are not particularly open about how much gold is being mined. In addition, it is difficult to account for the gold output in illegal mining activities.

World production for 2011 was at 2,700 tonnes. Since the 1950s, annual gold output growth has approximately kept pace with world population growth of around 2x, although far less than world economic growth of some 8x, or some 4x since 1980.

The gold specie standard arose from the widespread acceptance of gold as currency. Various commodities have been used as money; typically, the one that loses the least value over time becomes the accepted form. The use of gold as money began thousands of years ago in Asia Minor.

During the early and high Middle Ages, the Byzantine gold solidus, commonly known as the bezant, was used widely throughout Europe and the Mediterranean. However, as the Byzantine Empire's economic influence declined, so too did the use of the bezant. In its place, European territories chose silver as its currency over gold, leading to the development of silver standards.

Silver pennies based on the Roman denarius became the staple coin of Mercia in Great Britain around the time of King Offa, circa CE 757–796. Similar coins, including Italian denari, French deniers, and Spanish dineros circulated in Europe. Spanish explorers discovered silver deposits in Mexico in 1522 and at Potosí in Bolivia in 1545. International trade came to depend on coins such as the Spanish dollar, the Maria Theresa thaler, and later, the United States trade dollar.

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