Recent History of Gold in Financial System and its Reflections on Formation of Modern Financial Markets

Abstract

Thanks to some physical and chemical properties that are not found in other metals, gold is used in many different areas of life, from nano technologies to engineering studies, from space industry to a wide range of health applications. But the main factor that distinguishes gold from other precious mines and metals is that gold has formed basis of monetary systems throughout history and has been one of the leading tools of economic exchange. In every era, gold coins of various sizes and designs have been minted and put into circulation as symbols of governments, all rights and obligations of countries towards each other have been determined with gold, payments have been made with gold, and it has become one of basic economic tools of individuals, institutions and countries. Gold, which is still among the most important investment and savings preferences today, continues to be used as a safe haven and store of value by savers and investors, and continues to serve as a protection buffer in reserves of central banks against political and economic uncertainties.

In our study, history of gold in recent years of financial markets and its reflections on emergence of modern financial systems today were investigated. In this context, a comprehensive literature research was conducted on subject and developments in the last century and in recent history were discussed, including Mercantalist period, Gold Standard Period, I. and II. The Economic Depression Period between World War II, emergence of Bretton Woods System, use of Gold Exchange System, collapse of Bretton Woods System and subsequent developments, Free Gold Markets Period, which was considered a new beginning, and ultimately globalization and development of financial markets. Considering events that took place in the last quarter of 20th century, when new investment instruments emerged in the world and in our country with liberalization, digitalization of gold, which is a traditional physical medium of exchange and value storage, as a result of its transformation in keeping with times, is used extensively in virtual channels of today's modern financial markets and its development and effects have been revealed.