A condition said to exist in a country when it possesses abnormally large holdings of gold, which are available as a basis of credit expansion. According to the exponents of the "quantity theory" of money, gold inflation is one of the causes of high prices. It is a condition that automatically tends to correct itself since high prices discourage foreign buying and encourage importing. This is likely to lead to an excess of imports over exports. Since an excess of imports usually is paid for in gold, a reduction in gold holdings is thereby effected.
See GOLD RESERVE
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