The History of Investing in Gold
The first evidence of gold being smelted by human hands comes from Ancient Egypt in 3600 BC. That is more than five thousand years ago! Gold has been consistently used by societies across the world throughout history, even when other metalworking has not.
The Aztec peoples of Mesoamerica worked with gold extensively, despite never using other metals or developing significant metallurgic technology, and it has been traded between people thanks to its attractive appearance for thousands and thousands of years.
Nowadays, gold is primarily used for investments and jewelry, but how has this changed over time? What is the history of gold as an investment? In this blog post, we are going to give you a brief history of gold investing, from the earliest use to modern gold IRA accounts.
The Broader History of Gold
Gold has been highly prized in almost every culture and age. From the Egyptian pharaohs’ gold death masks to the Aztecs’ use of gold in sacred rites, gold has been a symbol of power and prosperity across the globe for thousands of years.
Gold ingots were used as payment in ancient China, and gold coins were in use in the Middle East as early as 600 BC. As well as coins, gold was a vital element in art and adornment throughout the many dynasties of ancient China.
The Grecian and Roman empires acquired large gold treasure hoards as a display of affluence as well as a practical reserve for times of crisis.
Gold was significant in influencing the world economy. The Spanish conquest of the Americas, for example, was partly motivated by a desire for gold, and the flood of New World gold into Europe had a significant influence on global trade and the development of capitalism.
The Gold Standard established the foundations of international banking in the nineteenth century, tying major worldwide currencies to a set quantity of gold. This system offered stability but was abandoned in the twentieth century, most notably by President Richard Nixon in 1971, giving rise to the contemporary fiat currency system.
Without gold, developing a stable monetary standard would have been significantly more difficult, and global trade prosperity would have been more difficult to sustain. Gold is the foundation of modern capitalism, for good and ill.
The Gold Standard: The Core of Investing
The gold standard tied major world currencies to gold, with central banks ready to buy and sell gold bullion at a predetermined price. In 1792, the United States Congress approved the Mint and Coinage Act.
This statute established a fixed gold price in relation to the US dollar. Silver was eventually withdrawn entirely from the US Mint’s fixed rate system in 1873, and a statute known as the Coinage Act of 1873 was enacted to remove silver coins from the US monetary system officially.
This system arose in the late nineteenth century, briefly failed during WWI, and then reappeared in a modified form until it was totally abandoned by Nixon in 1971. This means that gold and currency prices are no longer tied together, making gold a separate commodity that many people invest in. As you can see from any Bullion Max company review, gold investment is a big deal!