Table of Contents
On this page, we take a look at the history of gold, and the role it has played throughout history around the world. Gold has always been known as a precious metal in the history of humanity. Its role as a valuable currency has made it one of the most coveted assets that have maintained a high value on trade. For over 5000 years, this commodity has attracted people’s attention in almost all parts of the world, with the quantity being more in some regions than others and the exchange rates being high. Its inability to tarnish, the ease with which it can be used, and its natural beauty are some of the reasons why gold has always been the preferred choice over silver. Most people faced with the choice between gold and silver will opt for the former because it is a great decorative metal, even though it has a higher price.
Discovery of gold
Every website article and history books show that gold was first discovered in streams in various parts of the world, and its shiny nature and beauty encouraged human interaction with it. Unlike other metals, it created a culture of glamour and wealth because of its rarity, and it is a conductor of electricity and heat. Soon, gold-bearing jewelry was the preferred choice, especially for people who wanted to showcase their high place in society. Gold progressed to being an acceptable currency in many other parts of the world. Despite this, scientists and archaeologists have not been able to prove the exact time and how humans started using gold.
Origin of gold
Gold-bearing jewelry became common in 2600 B.C. in Mesopotamia, but it was available long before that. Human fascination with it grew as its decorative uses became more popular than other metals. According to some legends, Solomon’s temple was majorly constructed with gold in 950 B.C. In 1223 B.C., Tutankhamen’s tomb was also built with gold as the main material. In 700 B.C., standard gold and silver coins became the currency that replaced barter arrangements and made the process simpler. By 564 B.C., gold was an international currency because of the improved refining techniques that changed the commodity’s mining process.
Between 2450 and 2600 B.C., gold transformed from a piece of jewelry to a troy ounce. It had a high value but was not used as real money. During this time, large quantities of gold in alloys were found in sacred places and objects of worship. Prisoners of war were sent to streams and rivers in several locations to mine the gold in its purest form.
Conquest for gold
All historical texts related to the first discovery of old show that humans were impressed by the metal from the first contact.
The most reputable archaeological evidence shows that gold was first discovered in Egypt in the 3,000 B.C. era. Gold prices were set by the pharaohs and Egyptian priests, and the metal played a major role in the temples.
It is also believed that the first exchange rate system emanated from Egypt, where the exchange ratio was one piece of gold equaling 2½ parts of silver. It was first marked when the value of silver was lower than gold. Egyptians are also believed to have recorded gold maps that showed where gold deposits could be found around the kingdom. By 3,600 B.C., their goldsmiths started melting gold, especially those that were a product of war conquest. Slaves, criminals, and prisoners of war were also placed in the gold mines.
Despite their open admiration of gold value, Egyptians never allowed barter arrangements involving gold. They maintained the use of agricultural products as money but kept their maps to date. The kingdom of Lydia in Turkey changed that by allowing the use of gold as a currency.
Gold history also shows that ancient Greeks perceived the commodity as a status of wealth during 550 B.C. It was also a currency and a sign of glory among the immortals. The mines were mostly in the Middle Eastern and Mediterranean regions, which drew speculation from Aristotle and Plato about where it came from. The gold mines in Greek are still available in modern civilizations because of the vast water bodies as mines.
In 100 B.C., the Romans took over from the Greeks and showed their brilliance by improving the existing mining techniques and technologies. The gold mine operations that the Roman Empire used were water-based, thanks to the numerous resources they had. They also had new constructions, such as long toms, mining hydraulics, sluices, and water wheels, which allowed the Romans to get more gold from under the ground. They also relied on slaves and prisoners for labor. They introduced the roasting technique, which became a more efficient way of separating gold ore bodies from other rocks to improve the purity of the metal.
Gold has also been mentioned in the bible, where Havilah is described as a place where good gold is available in Genesis 2:10-12. Early civilizations also used gold alloys for religious purposes, especially during ceremonies and in architectural designs.
Unlike other metals, gold was a symbol of separating social classes in ancient civilizations. Emperors, priests, elite classes, and middle-class people all used it to show how powerful they were in the community.
Gold in the United States
The history of gold in the US started in 1792 when the United States Congress established gold and silver standards, which changed the modern gold history. The Mint and Coinage Act, which Congress passed, set a fixed price of gold in relation to US dollars and paved the way for the legal use of gold and silver in the United States.
The price of an ounce of gold was $19.30, which was 15 times more than the price of silver. Silver coins, including those from the Spanish empire, were used for small purchases, whereas gold coins were used for larger ones. The legal ratio of gold prices to silver was 15:1, which is why the rate for gold never went beyond 15.5:1 or 16:1.
The ratio changed during the civil war when the US could not pay its debts with gold and silver. Paper money came into the legal tender and became an official currency in the United States. In 1873, the Coinage Act removed the silver dollar from circulation and reduced the value of silver to less than $1.
The silver dollar was not used in the United States again, although it remained an important topic of discussion in the political fields. The gold dollar replaced silver as a standard unit, and the paper dollar was used to represent gold reserves in the country.
Gold rushes in the 1870s
Several gold rushes occurred in various countries in the 1800s because it was one of the metals that could make people millionaires.
Although the California gold rush is the most popular, the first one happened in North Carolina in 1799 after a young boy found huge gold bars in Cabarrus County.
The California gold rush took place in 1848 after John Sutter found traces of gold near Sacramento, San Francisco. The intention was to keep the discovery low-key, but a San Francisco publicist by the name of Samuel Brannan confirmed rumors about it. Americans and immigrants alike started moving to the state of California, which resulted in the population increasing to over 25,000 people within 2 years. By 1850, the California gold rush had resulted in 300,000 people relocating to the state.
Parts of British Columbia
In 1896, another gold rush happened in the Klondike River around the Yukon Territory and other parts of the British Territory. Prospective gold owners fought the harsh weather to get a portion of the newfound wealth.
Multiple gold rushes happened in Australia in the 19th century, starting from 1850. South Wales and Victoria were the first regions to have gold, followed by Western Australia later. Most of the towns in Australia became habitats for the travelers that eventually dwelled there, which is how they became established.
The collapse and rise of the gold standard
The collapse of the gold standard was mostly during world war I and the second world war when most countries suspended the use of gold coins and opted for paper money to pay for their military operations and treatment of soldiers. The large quantities of printing led to hyperinflation, which started reducing when world leaders saw the stability that the gold standard brought to the world economy.
After the war, countries forged alliances, and international debt increased due to strained governments’ finances. By then, it was clear that the gold standard could not remain steady during tough economic times, which reduced the level of confidence people had in it. Despite this, countries were still unwilling to abandon gold and instead, reinstated it hoping it would bring back the original stability.
After the great depression, European countries’ currencies were misaligned, which lead to a loss of confidence in banks and paper money. People started hoarding gold, and banks increased interest rates to try to prevent people from converting fiat currency into gold coins. The cost of business rose, and many countries ended up leaving the gold standard.
Only the US and France tried to maintain their gold reserves. President Roosevelt implemented measures like prohibiting redeeming of dollars for gold, asking banks to take their gold to the Federal Reserve, and stopping the export of gold. Eventually, private ownership of gold was prohibited through the Gold Reserve Act of 1934. It allowed the United States to pay its debts in dollars instead of gold, which limited the global market for world gold.
Gold history in 1944
The gold standard was doing great in the world financial markets until World War I and II began, and the exchange rates dropped. The Great Depression that occurred between the two wars also made matters worse for the gold value. When it was over, world leaders came together through the Bretton Woods Agreement. It helped create a gold exchange rate system that allowed the price of gold to be fixed to the US dollar. The move, which was a new radical experiment, made the United States more prominent than any other country globally, with the dollar becoming one of the most powerful currencies.
After the second world war, the United States economy was stronger because the US did not have broken infrastructures to fix, unlike other European countries. They also had most of the world’s gold reserves and the pegging of the gold prices to the dollar, which also contributed to making it the superpower country it became in the new world.
The gold standard in the 1970s
In 1944, the price of gold was set at $35, and it was not expected to change in the foreseeable future. However, that changed in 1970 when the Vietnam War started. The gold standard reduced, causing major changes in America’s budget. President Richard Nixon put an end to the Bretton Woods system, creating a moment that would be known in history as the Nixon Shock.
Between 1971 and 1976, there were several attempts to salvage the gold standard, and the gold price started rising to a level that no other currencies could sustain. That is the main reason why the gold price chart begins in 1970. Despite such attempts, the unit gold price was low until 1980, when it skyrocketed to $800 and above for a unit of gold.
The modern history of gold
Currently, no country in any part of the world is using gold currency. The Swiss Franc was the last to use the gold standard until the year 2000. Most countries prefer to hold gold reserves to defend their currencies in case of any kind of emergency.
The United States, which has the largest reserve, followed by Germany, has its reserve at Fort Knox. The exact amount of gold at the well-guarded location remains unknown.
Today, of course, gold is used and bought for a wide variety of reasons, from jewelry to investment. Investing in gold has become a growing area of diversification, and especially in things such as IRA’s
In 1987, the world gold council started overseeing everything related to gold. By 2011, the price of an ounce of gold was $2000, which led to an increased number of investors. Since 1970, some chart shows the price as stagnant, but it had a spike in the 1970s, part of 1980, and 2011. As an investor in gold and silver, you must weigh all the information and current gold investment trends to make the right moves for the right prices.