The Historical Development Trajectory Of The International Gold Market

1,Imperial monopoly period (before the 19th century)
Before the 19th century, because gold is extremely rare, gold basically for the emperor's exclusive wealth and power symbols; or for the gods have, become a consecrated utensils and decorate the material to protect the image of the gods; although the 6th century BC appeared in the world's first gold coin, and the general flat people is very difficult to have gold. The gold mines were also owned by the royal family, when gold was mined by slaves and convicts under extremely difficult and harsh conditions. It was on this basis that gold nurtured the civilizations of Ancient Egypt and Rome. 16th century colonists left a bloody page in the history of human civilization by killing local peoples and destroying cultural heritage in order to plunder gold. Plunder and bounty become the main way of gold circulation, the free trade market exchange method is difficult to develop, even if it exists, but also because of the proprietary nature of gold and limit the scale of gold free trade.  

2, The gold standard period (early 19th century to 20 century 30s)  
Into the beginning of the 19th century, has been in Russia, the United States, Australia and South Africa and Canada found a wealth of gold resources, so that the gold productivity rapid development. Only in the second half of the 19th century, human production of gold is more than the past 5,000 years of production combined. Due to the increase in gold production, human beings increase gold demand to have a realistic material condition, to the development of gold productivity as a premise, human entered a gold standard period. The establishment of the monetary gold standard means that gold from the emperor's exclusive, to a broad society; from the narrow court category into the ordinary economic life; from the symbol of privilege and luxury evolved into a symbol of asset wealth. The gold standard system that gold is money, in the international is hard currency. Free to import and export, when the international trade deficit, can use gold to pay; in the domestic, gold can do currency circulation. The gold standard system has three major characteristics, such as free casting, free exchange and free export. The gold standard system began in 1816 in Britain, to the end of the 19th century, the world's major countries are basically the implementation of the "gold standard".

In 1914 when the First World War, the world has 59 countries to implement the gold standard system. The "gold standard system" although intermittent, but generally continue to the 20th century in the 1920s. Because of the specific situation of different countries, some countries to implement the "gold standard system" for more than a hundred years, some countries only have a few decades of "gold standard system" history.

With the formation of the gold standard system, gold assumed the general equivalence of commodity exchange, become the medium of the commodity exchange process, gold social mobility increased. The development of the gold market has objective social conditions and economic needs. In the "gold standard" period, although the central bank of each country can according to the national currency parity provisions of the gold price unrestricted to buy and sell gold, but in fact is still through the market throughput gold, so the gold market to get a certain degree of development. Must point out, this is a strictly controlled official market, gold market cannot get free development. Therefore, until the First World War, only the world's only British London gold market is an international market.

At the beginning of the 20th century, the First World War broke out a serious impact on the "gold standard system"; to the 30s and the outbreak of the world economic crisis, so that the "gold standard system" completely collapse, countries have strengthened the trade control, prohibit gold free trade and import and export The open gold market lost its basis of existence, the London gold market closed. A shut is 15 years, until 1954 after the reopening of the party. In this period some countries to implement the "gold standard" or "gold exchange standard system", greatly compressed the monetary function of gold, make it out of the domestic circulation payment field, but in the international reserve assets, gold is still the last means of payment, as the world currency The function of gold is still subject to the strict management of the country. From 1914 to 1938, the vast majority of western mineral gold was absorbed by the central banks, the gold market activity is limited. Since then the management of gold although some loosening, but long-term artificial to determine the official price, and between the country and the country trade strict barriers, so the liquidity of gold is very poor, the market mechanism is seriously inhibited, the gold market development has been seriously impeded.

3, The Bretton Woods system period (the 1940s to the early 1970s)
In 1944, after a heated debate Britain and the United States reached a consensus, the United States in May of that year invited to participate in the preparation of the United Nations 44 government representatives in the United States Bretton Woods held a meeting, signed the "Bretton Woods agreement", the establishment of the "gold standard system "After the collapse of the second international monetary system of mankind. In this system the US dollar is pegged to gold and the US assumes the obligation to exchange gold at official prices. National currencies are pegged to the dollar, and the dollar is in the center, playing the role of world currency. The actual is a new gold exchange standard system, in the Bretton monetary system, gold whether in circulation or in the international reserve role have been reduced, and the dollar has become the main character of the system. But because gold is the last barrier to stabilize this monetary system, so the price and flow of gold are still subject to stricter control, countries prohibit residents to buy and sell gold freely, the market mechanism is difficult to play effectively. London gold market in the system was established ten years after the recovery.

The operation of the Bretton Woods monetary system is closely related to the credibility and status of the dollar, but in the 1960s the United States was mired in the Vietnam War, the fiscal deficit was huge, the international income situation deteriorated, the credibility of the dollar was greatly impacted. A large amount of capital fled, countries have sold their hands of the dollar, snapping up gold, so that the United States gold reserves sharply reduced, London gold prices soared.

In order to suppress the rise of gold prices, maintain the exchange rate of the dollar, reduce the loss of gold reserves, the United States joint Britain, Switzerland, France, West Germany, Italy, the Netherlands, Belgium eight countries in October 1961 to establish a "gold treasury", the eight central banks out of a total of 270 million U.S. dollars of gold, by the Bank of England for the gold treasury agent The late 1960s, the United States further expanded the war against Vietnam, the balance of payments further deteriorated, the dollar crisis broke out again.

In March 1968, half a month, the United States gold reserves out of more than 1.4 billion U.S. dollars, only March 14 a day, the London gold market turnover reached 350 ~ 400 tons of record-breaking figures. The United States no longer have the ability to maintain the official price of gold, after consultation with members of the gold general treasury, announced that no longer according to the official price of $ 35 per ounce to the market supply of gold, the market gold price free floating, but governments or central banks still according to the official price settlement, since the gold began a dual-price system phase. But double price system also maintained three years of time, the reason is the United States balance of payments is still deteriorating, the dollar is unstable; Second, the western countries are dissatisfied with the United States to have private interests as a principle, despite the dollar crisis refused to devalue, forced to maintain a fixed exchange rate. So, some European countries took the strategy of inviting the king into the jar, since the United States refused to raise the price of gold, let the dollar depreciate, they will be in the hands of the dollar to exchange for the United States reserve gold. When the news came out in August 1971 that France and other western European countries to exchange a large number of dollars for gold, the United States on August 15 had to announce to stop fulfilling the obligations of foreign governments or central banks to exchange dollars for gold to the U.S. In March 1973 because of the devaluation of the dollar, once again triggered the European selling dollars, the rush to buy gold. Western Europe and Japan foreign exchange markets had to be closed for 17 days. After negotiations finally reached an agreement, the Western countries to give up the fixed exchange rate, the implementation of floating exchange rates. So far, the Bretton Woods monetary system completely collapsed, from then on also began the gold demonetization reform process. But from the legal point of view, the international monetary system of gold demonetization to 1978 before the formal clarification. The international monetary fund in 1978 by a majority vote to approve the revised "international monetary fund agreement". The agreement deleted all the previous provisions on gold, announced: gold no longer as a currency fixing standard, abolished the official price of gold, can be in the market free to buy and sell gold; cancel the international monetary fund must be paid with gold provisions; sell the international monetary fund 1/6 gold, the profits for the establishment of help low-income countries preferential loan fund; set up special drawing rights instead of gold for member countries and IMF for certain payments between member countries and the IMF, etc.

In this period the price of gold has been strictly controlled by the state, the state intervention in the gold market from time to time, the gold market is only the state gold control of a regulatory tool, it is difficult to play the role of market resource allocation. The function of the market is not sufficient.

4, Gold demonetization period (1970s to the present)
The result of international gold demonetization, make gold become can freely have and free to buy and sell commodities, gold from the national vault to the common people, its liquidity greatly enhanced, gold trading scale increase, so for the development of gold market, development provides a realistic economic environment. Gold demonetization of 20 years is also the world gold market to develop the period. Can say gold demonetization make countries gradually relax the gold control, is today's gold market to develop the policy conditions, but also need to point out is that the gold system demonetization and the reality of the demonetization process there is a lag phenomenon. The international monetary system in the gold demonetization of the legal process has been completed, but gold in the actual economic life is not completely out of the financial field, today gold is still as a recognized financial asset active in the investment field, as a national or personal reserve assets.
Today's gold is divided into commodity gold and financial gold. The country liberalized gold control not only make the commodity gold market to develop, but also prompted the rapid development of the financial gold market. And because of the continuous innovation of trading tools, dozens of times, hundreds of times to expand the scale of the gold market. Now the commodity physical gold trading volume is less than 3% of the total trading volume, more than 90% of the market share is gold financial derivatives, and the world's central banks still retain up to 3.4 million tons of gold reserves. In a statement by the 15 European central banks on 26 September 1999, it was once again confirmed that gold is still a recognized financial asset. Therefore we can't simply the gold market development reason attributed to the gold demonetization results, also can't the gold market as pure commodity market, objective evaluation is: in the international monetary system gold demonetization conditions, gold began by the monetary properties of the dominant stage to the commodity properties back to the stage of development, the country let go of gold control, make the market mechanism in gold circulation and gold resources allocation In terms of gold circulation and gold resources allocation play an increasingly enhanced role. But at present gold is still a special commodity with financial properties. Therefore, both the commodity gold market and the financial gold market have been developed. Commodity gold trading and financial gold trading in different regions, different markets in the performance and active degree of different.