Why Gold Is The Most Sought After Metal On Earth
Did you know that gold was not ‘born’ on Earth? It is said that a collision of neutron stars or supernova explosions may be the origin of the yellow metal.
So how did the yellow metal we call gold become the most sought after on Earth?
Gold was one of the first metals discovered and it was found in pure native form such as nuggets or flakes.
Gold was used ornamentally because it is malleable and ductile.
Gold’s permanence and luster that linked it to concepts such as royalty and immortality. Gold does not tarnish or corrode.
Over time, gold became synonymous with wealth and power.
Gold was used to facilitate the ancient trade of barter. Money.
The first people to mint gold coins were what is now Turkey. Then the Chinese. Then the Greeks. Then the Romans.
During Roman times, the silver to gold ratio was 12:1.
The Romans were first to debase the metal due to the Empire’s excessive spending. They added base metals to the gold (and silver) to make it easier to pay their debts (sound familiar? only this time with money ‘printing’).
The debasement of Roman currency is one of the reasons as a cause for the downfall of the Empire.
Civilizations have chosen to use gold as money because —
Gold is rare
Gold is malleable and soft
Gold has intrinsic value
Gold is immortal
Gold is easy to identify
Gold meets all the properties of money
However with the inventions of banking and paper currency, the role of gold began to transform.
A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. This allowed for a fixed exchange rate between countries.
President Roosevelt in 1933 issued Executive Order 6102 which criminalized the possession of any monetary gold. All gold owned by United States citizens was to be delivered to the Federal Reserve.
Between 1945 and 1971, the Bretton Woods system was a form of the gold exchange standard whereby a country guarantees a fixed exchange rate to the currency of another country that is on the gold standard. During this period, one ounce of gold was valued at $35.
In 1971, President Nixon ended the convertibility of gold to US dollars. This began the era of FIAT CURRENCY and allowed the gold price to ‘float’.
Despite gold no longer being the basis of the modern monetary system, countries still choose to hold TRILLIONS OF DOLLARS worth of gold in their reserves.
Today there is more demand for gold than ever before.
Gold Facts:
Gold is the most malleable metal. One ounce of gold can be hammered into a single sheet (30 ft by 30 ft).
Gold is the most ductile metal. One ounce of gold can be stretched to a length of 50 miles.
Gold is a noble metal which resists degradation by air, moisture, or acidic conditions.
Gold is so rare that the amount of gold mined since the dawn of time could all fit in a (69 ft) cube.
Some data sourced from goldcorp.com
