Gold is very high in liquidity so, it can be considered as a kind of money. Therefore, importing gold might be a kind of foreign exchange.
Moreover, governments reserve in both gold and other currency. When they use their foreign reserve to buy gold, they simply change the structure of their reserve, hence this action doesn’t affect trade deficit.
Do you agree with these argument?
Tags: currency, foreign exchange, Forex, gold, governments, liquidity, money, trade deficit