Why do countries have a gold reserve?

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Accepted Answer

Many countries hold gold reserves as a kind of reserve of value that they can rely on if they lose confidence in securities. For example, in the worst-case scenario, a country can use its gold reserves to import goods or to defend the value of the currency. At the time of the gold standard, the gold in the vaults of central banks functioned as a backing for the money in circulation, but that is no longer the case today. The gold still indicates confidence in a coin, but the value of the currency is no longer directly derived from a claim on the gold in the central bank's vault.

There are also countries that hold almost no gold reserves. These are either very poor countries or countries that have a large underground gold reserve. Also, countries with oil reserves have less need to maintain a large gold reserve because they always have a valuable product to export.

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