Central Banks And Their Gold Reserves
Gold is the ultimate asset, the most sought-after precious metal, which provides the owner with wealth, respect and power.
Gold is wanted by ordinary people, big organizations, institutions, in one word, by everybody. Old civilizations, like the Egyptians, for example, have plated their temples and shrines, which were the most valuable assets they possessed, in gold. Later on, rich bourgeoisie started their pursuit of the glittering metal which provided them with wealth and security.
Prior to the 17th century appeared the first commodity money which were made of both gold and silver, and, together with money popped up the idea of a central banking system. History teaches us that the medieval European Knights Templar were the first ones to set the basis for the modern banking system, as their promises to pay were highly respected. Therefore, from medieval times, bank prototypes were known to collect gold for their monetary reserves, and this is how the first global gold standard emerged.
Nowadays, central banks have the monopoly of creating the currency of a nation, and their decision of buying and selling gold is crucial for the well-being of that currency. A central bank can keep the price of gold from rising, but it can also raise it and lose control of it.
Although central banks do not have only gold reserves, this precious metal is very valuable for the economic security and stability of the government and nation they exist for.
In times of recession, gold is the ultimate salvation because it has always been accepted as the ultimate means of payment. Historically, governments have always decided to hold gold for a very simple reason: it was an element of stability in the currency in the long run. That is why, nowadays, with the economic crisis and everything specialists suspect a renaissance of gold in central bankers minds to occur.
It is obvious that gold is an element of stability in the currency and in the ultimate value of the currency.
Article Source: FxTradingStock.com
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Learn from professionals how to buy gold bullion in times of recession.
by: Jack Wogan
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Word Count: 341
Date: Mon, 14 Jun 2010
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