Gold points: Difference between revisions
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'''Gold Points''' was a term which |
'''Gold Points''' was a term which referred to the rates of [[foreign exchange]] likely to cause movements of [[gold]] between countries adhering to the [[gold standard]].<ref>http://chestofbooks.com/finance/banking/Money-And-Banking/2-The-Gold-Points.html</ref> |
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==Application== |
==Application== |
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In accordance with the law of [[supply and demand]], the concept determined that the fluctuating limits of [[currency]] fixed the cost of money between the place where the bill was drawn and that in where it was payable. In the exchanges rates between gold-standard countries, these limits were known as the gold points, for the reason that, if the price of foreign bills |
In accordance with the law of [[supply and demand]], the concept determined that the fluctuating limits of [[currency]] fixed the cost of money between the place where the bill was drawn and that in where it was payable. In the exchanges rates between gold-standard countries, these limits were known as the gold points, for the reason that, if the price of foreign bills rose above the upper limits determined by the exchange rate, countries would find it cheaper to export gold than to export bills for the purpose of settling international accounts. Conversely, if the exchange rate fell below the lower limit of the determined rate, countries would find it cheaper to import gold than to sell bills to foreign creditors. |
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==See also== |
==See also== |
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==References== |
==References== |
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{{Reflist|colwidth=30em}} |
{{Reflist|colwidth=30em}} |
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[[Category:Gold|Standard]] |
[[Category:Gold|Standard]] |
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Revision as of 17:16, 6 November 2010
Gold Points was a term which referred to the rates of foreign exchange likely to cause movements of gold between countries adhering to the gold standard.[1]
Application
In accordance with the law of supply and demand, the concept determined that the fluctuating limits of currency fixed the cost of money between the place where the bill was drawn and that in where it was payable. In the exchanges rates between gold-standard countries, these limits were known as the gold points, for the reason that, if the price of foreign bills rose above the upper limits determined by the exchange rate, countries would find it cheaper to export gold than to export bills for the purpose of settling international accounts. Conversely, if the exchange rate fell below the lower limit of the determined rate, countries would find it cheaper to import gold than to sell bills to foreign creditors.