10 - External integration

Summary

Gold-point spread and asymmetry of gold points

Following chapter 9, the gold-export and gold-import points are, respectively, the cost of specie export (CX) and the negative of the cost of specie import (−CM), expressed in percentage terms (percent of parity). Then the gold-point spread (more generally, specie-point spread), also in percentage terms, is the difference of the gold points: CX − (−CM) = CX + CM, the sum of the specie-shipment costs. If the gold points are expressed as dollars per pound, GX and GM, then the gold-point spread again is derived as the difference between the gold points, this difference taken as a percentage of (true mint) parity: 100[(GX − GM)/M] = CX + CM again, following the notation of section 4 of chapter 8. This equivalent formulation of the spread justifies anew the representation of the gold-import point as the negative of percentage cost.

Of course, the gold points differ for GPA and GTF, whether for export or import. However, for both operations, the export point always differs in magnitude from the import point. The implication is that the gold points are not equidistant from mint parity. The mid-point of the gold-point spread, then, differs from mint parity. The spread mid-point (SM), expressed as the percentage deviation from parity, is half the sum of the algebraic gold points: SM = (CX + (−CM))/2 = (CX − CM)/2. Of course, parity itself in this configuration is zero [100.{(M − M)/M} = 0].