- Gold as a Form of Currency
- The Gold Standard
- The Home of Gold
Gold as a Form of Currency
Held in large reserves by world banks and the International Monetary Fund, gold bullion is a form of currency. For example, the U.S. Department of the Treasury houses a large portion of its gold reserves at the United States Bullion Depository adjacent to Fort Knox, whilst the Bank of England holds more than £2 billion of gold bullion in its gold vault.[1] According to the World Gold Council, in 2022 central banks bought 1,136 tonnes of gold.[2]
It is also worth noting that gold bullion coins from The Royal Mint, including The Sovereign and Britannia bullion coins, are UK legal tender.
The Gold Standard
From 1717 to 1931, British currency was linked to the gold standard, which meant that the value of paper money was linked to gold. A customer could present a banknote at the Bank of England and receive the amount of gold to the value of the money traded in. However, during the First World War the practice of exchanging notes for gold was suspended in order to stimulate the economy and contribute towards the war effort. In 1925, Britain briefly returned to the gold standard but the effects of the depression caused the United Kingdom to leave the standard altogether in 1931.
Although the gold standard no longer signifies the link between money and gold, it is used as an expression to describe something of the highest standard, from education to luxury goods.
Gold as an Investment Asset
Gold has historically served as a popular long-term investment, whether in the form of gold coins and bars, jewellery, antiques or art. Gold is also used in industries such as technology and medicine and, according to a report on the case for gold as a strategic asset by the World Gold Council, this level of demand could help enhance a well-diversified portfolio.
The Royal Mint offers a range of gold investment options, including physical gold bullion bars and coins along with a DigiGold savings plan, which allows you to start investing in gold for as little as £25. With DigiGold, you can purchase fractional quantities of a gold bar and you can sell your gold back to us at the push of a button, at any time of day or night.
The Home of Gold
With a 1,100-year history working with precious metals, The Royal Mint is trusted by investors around the world. View our range of gold bullion bars and coins or call our Customer Services team on 0800 032 2154.
Sources:
[1] How much gold is kept in the Bank of England? | Bank of England
[2] Central banks bought the most gold on record last year, WGC says | Reuters
