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14. United Kingdom

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14. United Kingdom

united kingdom flag

2013 Demand: 23.4 tonnes

Jewelry/Coin & Bar Demand: 23.4 tonnes / < 1 tonne

Reserves: 310.3 tonnes

% of Total Forex Reserves: 10.45%

2013 GDP: $2.49 trillion

D^g:GDP: 0.04%

Seniority”

Before the U.S. dollar held its current position as the world’s reserve currency, the British pound sterling held just that position. As the saying went, “The sun never sets upon the British Empire.” However, that statement could have been amended to say “The sun never sets on the British pound sterling” due to its worldwide ubiquity prior to WWII. Most empires throughout history have seen a very violent end, i.e. the Roman and French Empires. However, the British Empire realized a more benevolent decline from power, both as a military and economic power, that has afforded the U.K. a comfortable position in the current global economy. Despite not holding a large amount of gold reserves relative to the top economic powers in the world, the United Kingdom still possesses one of the strongest and most highly traded currencies worldwide. Certainly, being home to the most influential gold market in the world, the London Bullion Market, goes a long way in establishing its seniority in the global economy.

Gold Britannia

State Interests:

Among the nations on our list, the United Kingdom holds one of the smallest reserves of foreign reserves in the form of gold. Despite this, it currently has one of the strongest currencies in the world. This is an interesting feat that is accomplished in part by putting tariffs on all foreign gold purchases made by U.K. citizens. Until the financial crisis of 2008, the United Kingdom historically kept its current account deficit relatively low through the use of such tariffs, which has helped to keep the British pound strong even as its economy has been surpassed in size by emerging markets around the world.

Commercial Interests:

While the United Kingdom has a relatively low amount of foreign reserves in the form of gold, the island nation does serve a vital function in the global gold market, exerting a great deal of influence over the global price of gold. Each day, the five largest members of the London Gold Fixing Market set, or fix, the price of gold through the London Bullion Market Association. Founded in 1919, the LBMA was chaired by N.M. Rothschild & Sons throughout its history until 2004, when they announced they would be stepping down from the gold fix and would no longer be involved in gold trading. Since then, the chairmanship of the London Bullion Market Association has been held by various members of the LBMA on an annual rotating basis. Further, the London Bullion Market also sets the standards for what are known as “Good Delivery bars,” which are used in the settlement of international debt between governments or big banks.

jewelry in united kingdom

Civilian Uses:

Because of the limited availability of gold within the U.K. due to high tariffs on its importation, civilian uses for gold have been limited to normal jewelry purchases that are common to most countries.

Did You Know?

United Kingdom: As the world’s leading economic authority for several centuries following the discovery of the New World, it stands to reason that the English would be intimately involved in the standardization of gold in trade. During the 16th century, they popularized 22-karat “Crown gold,” the alloy used for British gold sovereign coins. While the other countries in Europe had their own gold specie, nearly all copied the .917 fineness (or 22 karats) of the gold sovereign. Subsequent gold coins that circulated in North Africa and the Middle East followed this standard, as well. Part of the legacy of the British Empire is that many gold coins continue to use the Crown gold fineness standard that originated in England. Today, alongside a modern version of the gold sovereign, the Royal Mint also produces a popular gold Britannia coin.

See Also:

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