The History Of Gold

October 28, 2008 | By | 2 Replies More

We do not know when man first came into contact with gold or began to appreciate the unique qualities of the yellow metal as its origins are lost in the mists of antiquity.

Small fragments of gold have been found in the caves of Paleolithic Man who existed some 35-40000 BC. It is not known whether these primitive forebears of ours appreciated the value or properties of the yellow metal.

It is well known that the ancient Egyptians used gold for their personal jewelry and the adornment of their temples and tombs so they clearly appreciated its value and yet it was not as currency or as the basic medium for exchange.

The first recorded evidence of the use of gold in coinage dates from circa 700 B.C. in Eastern Europe and gradually spread throughout the civilized cultures of the known world. At this happened nations and states could measure their prosperity by the gold they accumulated, whether by trading or war, and this continues to the present day.

The Spanish Conquistadores sent vast amounts of gold back to their homeland in the fifteenth and sixteenth centuries from their possessions in the new world of Central and South America which led to Spain becoming the wealthiest nation in Europe for many decades until overtaken by Britain and France whose territorial gains and trading spread across the globe.

As these empires went into decline in the early 1900’s so the USA grew into the worlds most powerful trading nation and as a consequence it’s gold reserves accumulated, strengthening the US Dollar to the extent that it became the worlds reserve currency and is the benchmark for trading oil and other commodities.

Owing to the overwhelming strength of the US economy it was able to untie the traditional link between gold and the value of currencies by floating the dollar and consequentially other currencies in an attempt to revive US (and international!) trade.

The value of gold quickly trebled in value against the US$. Five years later in 1980 gold reached a, then all time high of US$ 850.00 an ounce. In April 2008 this high was well and truly breached when gold soared to over US$1000 an ounce.

Now we are in the midst of a financial crisis gold has dropped back to around US$740 an ounce having briefly been below US$700.

In the eighties through to the beginning of the Millenium the speculators had had their day and a long-term gradual decline took over at a time when politicians and bankers played down the merits of holding gold as a hedge against currency fluctuations.

A memorable consequence of this was the publicly announced decision by the UK’s Chancellor of the Exchequer, at that time, Gordon Brown,  to sell off a substantial tonnage of Britain’s gold reserves over a short period of time in 1998.

The announcement came when gold was near a bottom and only served to depress the price even further.

Mr Brown somehow enjoyed the reputation of a prudent chancellor despite not having the elementary trading skills and common sense to have realized the consequences of his well broadcast actions – and now he is the UK Prime Minister and US puppet!

Empires come and go, trading nations have their day and now we know that yesterdays perceived strong economies are now in a decline arguably not experienced since the 1930s.

However, it must always be remembered that gold, and only gold, has remained untouchable as the benchmark test of prosperity for nations and individuals alike despite attempts to play down it’s importance.

This is why the emerging trading nations such as China and India are increasing their gold reserves whenever opportune trading circumstances arise and their citizens measure their individual prosperity by the amount of gold, usually in the form of jewelry or negotiable coins, that they own.

Russia, which has huge untapped mineral resources and is a major oil exporter has emerged from the dark days of communism and is becoming a dominant trading nation, is reported to be keen to accumulate more reserves of the precious yellow metal.

Regrettably world economic events have also seriously affected Russia’s finances to the extent that they are reportedly having to sell off some of their recently acquired gold reserves.

Gold is coming back into it’s own as the traditional economies of the world are showing increasing signs of unraveling.

The problems caused by the excessive printing of more and more paper money, low interest rates and easy borrowing criteria to provide short term solutions to declining buoyant economic activity are becoming more and more apparent with each passing day.

Manufacturing and retailing are becoming evermore affected by restrictive legislation imposed by governments without considering the inevitable consequences to employment. It is now evident that  the unproductive financial service industries, that have been the hardest hit, are leading the way in issuing redundancy notices.

Despite the attempts by governments to mask the true levels of inflation most westerners are very aware that that the bailout plans of governments means that the banknotes in their pockets are buying less and less of life’s essentials.Within the next 2 years it is highly probable that hyper-inflation will become the order of the day.

Is it any wonder then that the precious yellow metal is enjoying a strong revival?

There are those analysts that believe that the price of an ounce of gold will exceed US$1000.00 by the end of 2008 and will continue to rise as the currencies of the developed countries progressively lose their purchasing  power.

Related Posts Plugin for WordPress, Blogger...
More on this topic (What's this?)
Has Gold & Silver Finally Bottomed?
Gold Price Gravitating Lower Towards $1000
Read more on Gold at Wikinvest

Category: Gold

Comments (2)

Trackback URL | Comments RSS Feed

  1. Thanks for this article. I have just started investing in gold and I am now trying to read everything I can find about it. Please be so kind as to send me links to any of your other articles. Thanks

Leave a Reply

BullionVault