The gold standard is defined in many different reference materials as a monetary system in which the unit of currency used is a fixed quantity or weight of gold. Under this system, all forms of money, including notes and bank deposits, were freely converted into gold at the fixed price.

There are three known kinds of gold standard that have been adopted since the early 1700s - the gold specie, gold exchange, and gold bullion standards. Following is the definition and a brief historical account of each.

Gold Specie Standard:

In this gold standard, the unit of currency is linked to the gold coins that are in circulation. More specifically, the monetary unit is associated with the unit of value of a specific gold coin in circulation along with that of any secondary coinage (coins made of metal that is valued less than gold).

Recorded history points to the existence of a gold specie standard in medieval empires. For example, the Eastern Roman Empire made use of a gold coin called Byzant (from the original Greek term Bezant). The first known major area in the world to be on a gold specie standard in modern times is the British West Indies. That standard, however, was more of a commonly applied system rather than an officially established one. It was based on the Spanish gold coin called the doubloon.

The United States adopted the gold specie standard "de jure" (by law) in 1873, using the American Gold Eagle as unit.

Gold Exchange Standard:

In this gold standard, only the circulation of coins minted from lesser valuable metals (such as silver) may be involved. The authorities, however, will have undertaken a fixed exchange rate with a country that's on the gold standard.

Before the turn of the 20th century, countries that were still on silver standard started pegging their monetary units to the gold standard of either the United States or the United Kingdom. For example, Mexico, the Philippines, and Japan pegged their respective silver units to the U.S. dollar at fifty cents.

Gold Bullion Standard:

In this gold standard, gold bullion is sold on demand at a fixed price. It was introduced in 1925 by the British Parliament in an act which at the same time voided the gold specie standard. Six years later, the United Kingdom decided to temporarily stop the gold bullion standard because of the large amount of gold that flowed out across the Atlantic Ocean. The gold standard eventually ended that same year.

One of the advantages of the gold standard is that it sort of restricts the government's power in inflating prices, which is possible through excessive issuance of paper currency. Also by providing a fixed pattern of exchange rates, the gold standard may effectively lessen uncertainty in international trade.

As to its disadvantage, the gold standard may make monetary policy ineffective in stabilizing the economy in the event of a general slowdown in economic activity. This is likely, as many economists fear, since under the gold standard the supply of gold would be the exclusive determinant to the amount of money.


Most metallic chemical elements are known to easily oxidize and corrode, especially at high temperatures. Metals that have excellent resistance to oxidation and corrosion, even at high temperatures, are called noble metals. While there is no strict definition for this group of metals, it usually includes those that are extremely rare.

Thus, metals that are labeled "precious" are also considered noble metals (note, however, that noble metals are not necessarily precious metals). There are nine known precious metals - gold, platinum, iridium, palladium, osmium, silver, rhodium, ruthenium, and rhenium. With the exception of the latter, all are considered noble metals.

Using the "aqua regia" test (aqua regia is a mixture of concentrated nitric acid and concentrated hydrochloric acid, which is highly corrosive), here's how the eight precious-noble metals react:

• Gold, platinum, palladium, and osmium dissolve.

• Ruthenium dissolves only in the presence of oxygen.

• Rhodium dissolves only when it is in a fine, pulverized form.

• Iridium and silver do not dissolve under any condition.

In another definition, noble metals may refer to electrically conductive elements. Here, the term "noble" serves as a modifying word, such that the electrical conductivity of materials is graded from noble to active. Using this definition for noble metals then, we will find that silver is less noble than, say, graphite (although graphite is an elemental form of carbon and, therefore, is not considered a metal).

Below is a comparison of the chemical nobility of the precious metals (again, excluding rhenium), with details of their specific electronic configurations, simplified reactions (as per the pH diagram), and electrode potentials. The list is presented in order of increasing atomic number.

1. Ruthenium - VIIIb/5; Ru -> Ru2+ + 2 e-; 0.455 V

2. Rhodium - VIIIb/5; Rh -> Rh2+ + 2 e-; 0.600 V

3. Palladium - VIIIb/5; Pd -> Pd2+ + 2 e-; 0.987 V

4. Silver - Ib/5; Ag -> Ag+ + e-; 0.7996 V

5. Osmium - VIIIb/6; Os + 4 H2O -> OsO4 + 8 H+ + 8 e-; 0.838 V

6. Iridium - VIIIb/6; Ir -> Ir3+ + 3 e-; 1.156 V

7. Platinum - VIIIb/6; Pt -> Pt2+ + 2 e-; 1.18 V

8. Gold - Ib/6; Au -> Au3+ + 3 e-; 1.498 V

The second item appearing after the name of the metal (the three items are separated by semi-colons) represents the metal's reaction in water. In the pH diagram, the pH symbol is labeled on the horizontal axis to signify the -log function of the concentration of H+ ion. The lines, which represent equilibrium for the concentration, are drawn for ions at unit activity. Other concentrations may be represented by additional lines. The voltage potential is represented by a vertical axis, which is labeled Eh, where "h" stands for hydrogen.

Physics has an even more strict definition for noble metals. Here, it is required that the electronic structure's d-bands are filled. If this definition is followed, only gold and silver (among the precious metals) qualify as noble metals. Also note that the varying reactivity of the precious metals can readily be observed while preparing their surfaces in the vacuum regime called ultra high vacuum.