gold points

Quick Reference

The values of exchange rates under the gold standard at which it became profitable to ship gold from one country to another. For example, if the dollar rose relative to the pound sterling, a firm holding sterling with a dollar payment to make could buy gold from the Bank of England, ship it to New York, and sell it to the Federal Reserve Bank for dollars. The gold points were the lowest price of dollars which made this profitable, and the highest price of dollars which made it profitable to ship gold from New York to London. In peacetime conditions modern transport makes shipping gold so cheap that the gold points would be very close together: the possible fluctuations in market exchange rates under a gold standard would thus be very small.

Subjects: Economics.

Reference entries