Posts Tagged ‘gold’s value’
Gold’s Secret of Success
Gold has been mined for at least 5,000 years, a long time before a practical use could be found for the metal – primarily it was sought after because of its use in making jewelry and it never lost its golden luster. The luster attracted man's eye and still does to this day, it shines brightly and it does not rust or lose its luster as it ages.
Gold is also soft and easily worked which lends it to being shaped into whatever decorative adornment the craftsman’s imagination can conceive – some of the most intricate designs of jewelry from ancient times have been uncovered, despite the thousands of years that may have elapsed since being formed, precisely because of these qualities which gold has.
Gold is also rare, which adds to the perceived value of the metal; if you were to gather all the gold that has been mined from the start of men seeking out this precious metal, right the way to the present day you would have a cube of gold measuring a little of 70 feet square – you could drop it in the average sized home! Most of the gold in circulation today has been mined since the turn of the 20th Century, even with all the hype of the California Gold Rushes in the late 19th Century.
As a monetary system developed, gold was a leading support of the economic system of coutries all over the world as the moved from agricultural-based economies to industrail-based economies. Gold was used initially for minting coins with the sovereign or ruler of the country stamping their faces and marks upon the coinage to demonstrate a quality standard. The value of a coin was inherent in the value of the gold which it contained – in essence a dollar’s worth of gold went into creating a dollar gold coin.
As societies continued to develop, gold was used less and less in the actual coinage and instead, was used to provide the asset backing to the paper currency which was issued – paper currency is simply a “promise” by a country’s central bank or treasury department. This led to countries around the world buying gold bullion simply to store in a repository so they had the value of gold to back up the value of the currency they were issuing. the value of currency was governed by how much gold the country had stored - not their industry or financial base. In the latter parts of the 20th Century this practice waned as economies grew and outstretched the gold that was available to back the currencies; this proved no obstacle to issuing more money however, as the link between gold and money was decoupled (Switzerland being the last country to do this in 1997).
Gold’s success stems initially from its appearance and malleability, but as society has developed it has played a far more crucial role in underpinning the development of modern society and economic development. Gold was a common reason for exploration; American might never have been discovered but for man's fascination with this precious metal.