The gold coin or currency standard or the gold specie standard was initiated by England in 1816. It is regarded as the traditional form of gold standard.
It was a pure form of gold standard, as full-bodied standard coins made of gold were circulated under this system. Token coins and other forms of money were to be redeemable into gold.
The free coinage, i.e. conversion of gold bullion into gold coins, was allowed without any restriction in this system. It is, thus, regarded as “full gold standard.”
In short, circulation of gold coins, free coinage of gold, redemption of paper currency into gold, and freedom to melt gold coins are the characteristic features of the gold coin standard.
Simplicity, stability in internal price level and exchange rates, and automatic working “are its main merits. While, wastage of gold, lack of elasticity, lack of automaticity, non-realisation of internal price stability, deflationary tendencies, exchange instability, and fair weather craft are the major drawbacks of the gold coin standard.
Until 1914, however, the gold coin standard was in vogue in major countries of the world like England, France, Germany, the U.S.A., etc. But, after World War I it was abandoned.