History of Gold: Why so Precious?

 August 23, 2021

By  BC Editorial Team

All over the history of humankind, this precious metal evolved from formless golden nuggets found in rivers to an overall standard in many areas of life. When we say that something is “golden,” we mean that it’s outstanding, or special. Popular and successful people are often called golden boys or golden girls. If we talk about literal gold, athletes who take first place in the Olympic competitions receive gold medals (not entirely gold, but anyway).

Everyone and everything tells us that gold means excellent. But why did it happen? Why did gold become the synonym of perfection? What makes it so valuable? Its history can answer these questions.

The first encounter

The discovery of gold does not belong to a single person. The deposits of this metal are spread all over the world, so it’s hard to determine with 100% accuracy where it appeared first. However, the National Mining Association states that people who lived on the territory that is now Eastern Europe started using gold in 4000 B.C. They didn’t consider gold as money or currency and used it only for creating jewelry and decorations.

Another civilization that used gold for its decorative purpose was the Sumerians of southern Iraq. Around 3000 B.C., they created various kinds of jewelry with advanced designs that people wear even today.

Gold as a medium of exchange

Gold begins its journey as a currency in Ancient Egypt in 1500 B.C. The region of Nubia was unbelievably rich in gold, so Egyptians quickly became one of the wealthiest existing nations. They decided to make gold a legal tender for international trade. For this purpose, they minted Shekels, coins that had two parts of gold and one part of silver. That solution worked since by that time, a lot of civilizations were amused by this shiny yellow metal.

From that ancient time, gold began to accumulate value which transferred easily to the new calendar era, with the Norman conquest, the Byzantine empire, and alchemy. The Age of Discovery and the further development of international relationships opened new boundaries for the usage of gold. More and more countries agreed to consider gold as a medium of exchange, so the introduction of a gold standard was only a matter of time.

The gold standard: how it started and how it ended

The gold standard is a system of organizing money flows based on backing currency up with gold. It means that one unit of money has a fixed gold equivalent and can be converted into it. Most major countries like Germany, France, Great Britain, and the US adopted it in the 1870s. This system limited the power of government and reduced the possibility of inflation since they couldn’t issue more paper money without the necessary gold reserves.

However, the reign of the gold standard wasn’t so long. It fell down for the first time during World War I. Countries needed more money to support the military activities than gold reserves could provide. When the war was over, the system was more or less re-established, but then the Great Depression and World War II happened. These major events led firstly to a gold standard based on both gold and the US dollar. Then, when the needs of the world economy started growing, it was eliminated all along: Most countries now rely on fiat money—paper money with a value determined by authorities, not by a physical backup.

Wrapping it up

For now, the gold standard is considered outdated and useless. Some businessmen are still certain about bringing it back, but most economists are not ready to be on their side. Gold still matters, but not in the way it used to. But it’s still possible to get a gold bullion  with the help of https://www.pacificpreciousmetals.com/ to trade or to brag about to your friends.

BC Editorial Team


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