Characteristics of a Gold Standard

There are eight characteristics of a gold standard. The Reference for Business encyclopedia of Business list them the following way.

1. The value of the principle unit of a currency of a country on a gold standard is measured in relation to a fixed and predetermined quantity of gold
2. Paper money and gold can be equally exchanged for each other at a legal predetermined rate. This is known as inter-convertibility
3. Metal coins ( other that gold) can be used only as token money. That is, the nominal face value of the coin must be greater than the intrinsic value of the metal in the coin
4. Monetary authorities will accept gold bullion on demand and coin it or convert the domestic currency into gold. A nominal service fee ( or seigniorage) is charged to cover minting costs while providing the government with revenue. The monetary authorities will also exchange paper currency and nongold coins for gold on demand. This is referred to as convertibility.
5. International reserves are mostly held in gold.
6. Individuals in the country are free to hold any amount of gold in bullion or coin.
7. Individuals are free to import and export gold in any amount.
8. The creation of paper money is linked to the amount of gold reserves held by the central banking system.

Gold standards generally hold inflation in check and hold currency rates stable.

A gold standard doesn't allow a country or government to increase money supplies easily and it doesn't allow a country to intervene where they would move the international currency rate.

There is a difference between a true gold standard, an official gold standard, and a de facto gold standard.