The first person or civilization to discover gold are the ancient Egyptians. Gold was mined in Nubia around 2450 BC. C. An Egyptian alchemist named Zosimos was the first to find pure gold (24 centuries before Columbus arrived in the Americas).
Most likely, people have discovered gold for the first time in streams and rivers around the world, with its striking beauty and brilliance. The well-known history of gold goes back a long time, so much so that, according to the National Mining Association, the cultures of present-day Eastern Europe used it for the first time in 4000 BC. C. to make decorative objects.
Gold was generally used for a couple of thousand years only to create things such as jewelry and idols for worship. This was until around 1500 BC. C., when the former empire of Egypt, which greatly benefited from its gold region, Nubia, turned gold into the first official medium of exchange for international trade. Egypt created what was called the shekel, a coin that weighed 11.3 grams, and became the standard unit of measurement in the Middle East.
It was made of a natural alloy called electrum, which contained approximately two-thirds of gold and one-third of silver. It was also around this time that the Babylonians discovered a method called fire testing, one of the most effective ways to test the purity of gold, which is still used today. A few centuries later, around 1200 BC, the Egyptians discovered that they could alloy gold with other metals to make it stronger and give it different colored pigments. The Egyptians also began experimenting at that time with a method of casting called lost wax casting, in which a duplicate gold sculpture is molded from an original wax sculpture, a process that can be used to create wonderfully intricate sculptures, so much so that it is still used today.
A couple of hundred years later, in Lydia, a kingdom of Asia Minor, the first minting of pure gold coins began around 560 BC. In the 50 to. C., the Romans began to issue a gold coin called Aureus, which comes from the Latin word for gold, Aurum. This is where the golden chemical symbol Au comes from to represent gold in the periodic table of the elements.
A little over a thousand years later, in 1066 AD, William the Conqueror of Normandy became the first Norman king of England and, with his conquest, began a new monetary system based on metallic coins in England. With the new coin-based monetary system, the so-called “pounds”, shillings and “pence” were established, with pounds literally being a pound of sterling silver. In 1284, about a hundred years later, Great Britain issued its first gold coin, the florin, while throughout Europe, in present-day Italy, the Republic of Florence issued the first golden duchy, which soon became the most popular gold coin in the world and remained so for another five centuries. The gold coin was minted by a goldsmith named Ephraim Brasher and a few years later, in 1792, the infant U.
ST. The government passed the Coin Minting Act, which placed the country on a bimetallic silver and gold standard, which was maintained in one form or another until 1976, when the United States,. It eventually abandoned the gold standard to rely entirely on fiat money. Going back a bit to 1848, a man named John Marshall found gold flakes in a California stream, starting the California Gold Rush.
The California Gold Rush not only accelerated the settlement of the American West, but it was also the basis for the classic computer game that generations of Americans love so much, The Oregon Trail. A few years later, in 1868, George Harrison, a man from South Africa, discovered gold in his backyard and, since then, 40% of the gold mined in the world comes from the African nation. It is clear that gold has a long and historic history of obsession for more than 6,000 years. The interesting thing about gold is that, for unknown reasons, its mysterious ability to attract people from all over the world independently of one another allowed it to become an accepted medium of exchange anywhere in the world.
At various points in history, gold coins were minted, however, many coins were not minted by any central authority, but were simply minted by ordinary people. This ability to make homemade coins, so to speak, that were accepted as legal tender caused them to have an irregular shape. Obviously, this homemade minting was difficult to regulate and a method called clipping was a common problem with gold and silver coins. The irregular shapes allowed people to cut small pieces from the coins and eventually accumulate enough to melt the bits and create more coins.
Unfortunately, the cutting of hammered coins made the weight of the coin lower than the real value of the coin, so it ceased to be a valuable currency, especially abroad. Another problem was that minted coins, which were protected against cutting by special engraving, were easily counterfeited by casting them with counterfeit molds or stamped with counterfeit dies. The Great Coating of 1696 was an attempt by the English Government to solve the problem with new minting technology, but it was largely a failure. Issues like this led to the adoption of paper money, also known as “fiat money”, which actually began in the early 16th century and was based on the gold standard.
The full history of gold wouldn't be possible without a discussion about the gold standard. The gold standard was a monetary system in which the standard unit of economic account, for example, the U.S. UU. The dollar was based on a fixed amount of gold.
With this monetary system, a person holding a certain amount of paper money could go to a bank and exchange that money for a fixed amount of gold. The gold standard has been completely abandoned by all countries; a process of abandonment that gradually began towards the end of the First World War. Issues such as the problem of minting coins described above and the introduction of paper money began to create problems for nations, mainly because many of them were based on a bimetallic gold and silver pattern. Paper money began to be overvalued in gold, while there were also constant problems of supply imbalances between gold and silver that backed up paper money.
As a result, a metal was chosen to support the value of money, which was gold, thus starting the gold standard. According to the gold standard, the money supply is directly linked to the supply of gold, which means that, during the First World War, many countries decided to temporarily suspend the gold standard in order to be able to print money to pay for their military participation in the war. Unfortunately, this insane impression of money created hyperinflation. Once the war ended, countries began to appreciate the stabilization that the gold standard had provided to their currencies and international trade.
However, once the strong political ties between nations changed, international indebtedness skyrocketed and government finances became, to put it mildly, tense. It became clear that the gold standard could not be maintained during tumultuous times, creating negative sentiment and low confidence in it in the future, worsening economic conditions. However, nations were not yet willing to abandon the gold standard completely, to reestablish it and, at the same time, they were hoping that a new era of international stability would return to the gold standard, but in reality it never happened. The Great Depression was the last straw in many countries.
After the stock market crash of 1929, the currencies of European countries were completely misaligned, while some, especially Germany, were still recovering from the First World War. As people began to lose confidence in banks and in paper money, gold hoarding became commonplace and commodity prices, especially gold prices, rose. The bank rush and the hoarding of gold ended up making banks have to close. Countries began to raise interest rates in an attempt to entice people to keep deposits intact instead of converting their fiat currency into gold, but this exacerbated the problems because it made the cost of doing business much higher.
Over time, this led many countries to suspend or completely abandon the gold standard in the early 1930s, including Great Britain. Interestingly, many of the countries that abandoned the gold standard earlier were able to recover from the depression sooner than those that remained below the gold standard. At that time, the only major countries remaining on the gold standard with significant gold reserves were the United States and France. In the United States, President Franklin Delano Roosevelt instituted a series of measures to prevent gold hoarding, such as forcing banks to hand over all their gold holds to the Federal Reserve, not allowing them to exchange dollars for gold, and also prohibiting any export of gold.
In 1934, the Gold Reserve Act was instituted, which prohibited private ownership of gold. All of the gold was given to the government, which is where much of Fort Knox's gold comes from. This allowed the United States to settle its debts with dollars instead of gold. Over time, the United States essentially took over the global gold market.
In the 1960s, inflation was high and U.S. gold reserves had been significantly reduced to help pay for the reconstruction of Europe and other parts of the world after the destruction of World War II. In 1968, several countries that dominated the global supply of gold decided to stop selling gold on the London market, allowing the market to determine the price of gold. In 1971, the President of the United States, Richard Nixon, changed the price of an ounce of gold to 38 USD and no longer allowed the Federal Reserve to exchange dollars for gold.
This was essentially the end of the gold standard, but it wasn't until 1976 that the gold standard was completely abandoned and gold officially became free. While the gold standard appears to have been largely a failure, the system has advantages. The inability of governments to inflate the value of money because it is linked to the supply of gold makes it difficult for inflation to increase significantly, while a globally accepted gold standard sets exchange rates and reduces economic uncertainty. However, high inflation can occur when war destroys large parts of economies, as was exemplified after the First World War.
The inability to increase the money supply is often cited as the key issue under the gold standard. Many blamed the gold standard for prolonging the Great Depression, since the money supply could not be increased to mitigate the effects of the depression. As mentioned earlier, this led many countries to finally abandon the gold standard entirely and never look back. Some economists also believe that the inability to increase the money supply according to the gold standard places a limit on how much an economy can grow.
This is because as the productive capacity of an economy grows, so does its money supply, but since the money supply is limited by the amount of gold an economy has at any given time, the capacity of an economy to produce more and grow is also limited. Angie Picardo, from NerdWallet, believes that a perfect and current example of the dangers of the gold standard could be seen during the global financial crisis in the eurozone, especially in Greece. Although the euro is not linked to gold, the nature of the euro's fixed exchange rate throughout the euro area made it very difficult for struggling economies to get out of the crisis. The need to maintain a fixed exchange rate with other stronger economies in the eurozone made it difficult to manipulate the euro and the money supply to combat the effects of the crisis.
Roubini argues that the gold standard and other fixed exchange rate regimes also exacerbate changes in the business cycle. Roubini stated: “When there was a traditional gold standard, periods of boom and bust with really large swings in economic activity were the norm. Only when we switched to fiat money were central banks able to smooth the business cycle and make it less volatile, as we did during the financial economic crisis. Some have cited that another disadvantage of the gold standard is that countries with fewer reserves are at a significant disadvantage compared to those with more gold reserves.
Roubini warned that the gold standard always leaves the door open to a possible gold rush, which can cause enormous problems and side effects if those countries don't have enough gold to exchange it for paper money. There are still supporters of the gold standard, many of whom came to light during the global financial crisis, claiming, among other advantages, that the gold standard would create greater price stability than issuing fiat money based solely on trust. Austrian economic theory is famous for favoring the gold standard. Defenders of the Austrian economy believe that the manipulation of the money supply after the abandonment of the gold standard is what has actually led to the instability of global financial markets over the years.
The Mises Institute, which describes itself as “the global epicenter of the Austrian economic movement”, states that restoring the convertibility of the dollar by a fixed peso into gold would be a step in the right direction and would help to eliminate monetary policy from politics to “reduce corruption with special interests”. Having presented the above advantages and disadvantages, there is no doubt that the prevailing economic view is that the gold standard is not a feasible way forward. However, it must be said that, as with many things in this world, every coin has two sides. If you've come this far, you'll know that gold has a long history of human obsession that goes back more than 5000 years.
Since the first time mankind saw gold, it has aroused an insatiable desire for metal that has never wavered. That mutual desire for gold that captivated civilizations around the world independently of one another facilitated the global adoption of gold as a medium of exchange and, later, of course, the gold standard. Since the end of the gold standard, the price and production of gold have skyrocketed worldwide, and along with that, so has demand. Judging from the last 5000 years, it seems unlikely that our obsession with the precious metal will change anytime soon.
As much as the Egyptians loved gold, they never used it as a bartering tool. . The first known civilization to use gold as currency was the Kingdom of Lydia, an ancient civilization centered in western Turkey. As gold became increasingly precious and omnipresent, the kingdoms of the old world began to participate in multi-year wars that would leave towns and cities decimated.
Prisoners of war, criminals and slaves were sent to gold mines to dig for precious metals. These ancient wars did not always have to do with currency, since most of the time they had to do with religion and land, but gold was the main factor that allowed these kingdoms to fight more and more against each other. The fact that gold took a while to be used directly as a currency did not mean that it was not highly valued. The power and presence or ownership of gold went hand in hand.
Gold jewelry was found in the tomb of Djer, a king of the first Egyptian dynasty, around 2500 BC. The 14th century tomb of Tutankhamun. It contained the largest collection of gold and jewelry found in the world. And Egypt's acquisition of gold — by peaceful means or not — was a key basis for the power and influence that supported that society for centuries.