Question

What determined movements of gold between countries under the gold standard, and why?

Answer 1

Under the gold standard, the currency exchange rate was determined on the basis of the gold stored by the respective countries. It led the movement of gold between the countries to be very important for the economic reasons. The one of the most important determinant was the need to appreciate or depreciate the currency that led to the movement of gold from one country to another country. It happened because a country having a higher amount of gold can either appreciate the domestic currency or print new currencies without depreciation. It will make imports to be cheaper. On a similar note, a depreciated currency gives pricing advantage to the exporter country in the international market. Hence, the countries traded gold under the gold standard.