Gold has been a valuable commodity for thousands of years. In fact, gold price history dates back to the beginnings of civilization. No one knows who truly “discovered” gold. Since it is such a fundamental natural resource, it was discovered by many countries and civilizations independent of each other. Gold started out having a value in and of itself, and eventually ended up playing a critical role in the nation’s monetary system. Gold price history almost dates back to the beginning of history itself.
In ancient times, gold was valuable even before it was used for trade. Ancient people associated gold with many things including wealth, affluence, power, and even immortality. Entire civilizations warred against each other for both the protection of their own gold and the acquisition of another’s gold. Even though gold was valued a much sought after for thousands of years, actual gold price history did not begin until around 330 B.C. This is when the craftsmen of Lydia created the very first gold coin. As a result of this, gold became an official, measurable currency.
The use of actual gold coins as currency continued into the 17th century. This was known as “commodity money” because the commodity itself, gold, was being traded for goods and services. Eventually, this type of money became replaced by a type of paper money. This was known as “representative money” because it represented a value of a commodity; that is, it derived its value from that commodity. This change happed somewhat naturally. Gold price history says that gold merchants began giving slips of paper to anyone who entrusted them with gold. That person, in turn, could present that slip of paper to the merchant whenever he wanted to withdraw his gold. After some time, people began buying and selling goods with their “gold deposit slips” instead of the gold itself. Eventually, the formation of bank notes, the type of paper we consider money today, occurred.
At this point in time of gold price history, nations’ monetary systems were based on the gold standard. This meant that the value of the money itself was derived from gold. During its earliest use, money was literally redeemable for gold. This system, however, was faulty. It was subject to rapid inflation and deflation due to the varying supply of gold possessed by a country. When a country traded internationally, it paid, or was paid, in gold. This caused the levels of gold in a country to fluctuate. The gold standard, due to this issue, was eventually abandoned.
With the expulsion of the gold standard, a new monetary policy was introduced in gold price history: the gold bullion standard. This policy required that nations stopped dealing in gold coins and, instead, dealt only in gold bullion. Gold bullion is gold in the form of bricks; another common name for this form today is “ingot”. The value of the dollar, in turn, would be based on this bullion. Nations wishing to trade would trade bullion at a predetermined price instead of trading coins. Since this system was so similar to the gold standard, it incurred similar problems and was phased out.
The mid-1900s gold price history shows the United States changed its money to fiat currency. This meant that the dollar derived its value not from gold or any other commodity, but from the promise of the United States government. Basically, then it was law that the dollar was accepted by businesses and paid to employees. In the mean-time, gold was to determine its own value by trading on the open market. Today, the currencies of all countries are fiat ones.
As can be seen from described gold price history, gold has always held a prominent place both in the hearts of individuals and in the eyes of the world. The gold price has seen many diverse changes, from being valued simply because it was gold to being allowed to determine its own value. Gold price history is the one that is as rich and complex as the history of the world itself.