Learn about the 6,000-year-old history of gold, interest of nations, powerful and astute individuals
Today, the increase of gold prices can be explained in terms of risk diversification and the acquisition of safe haven assets in a period of economic and social instability due to the international context, but its history is much older and more complex.
Gold has moved the interests of nations, influential people, individuals. Around the yellow metal there are those who have risked and those who have planned. Attractive even from an aesthetic point of view, its brilliance, malleability, and the impossibility of destroying it (virtually speaking), have made it an interesting and intriguing commodity over the centuries.
The first uses of gold in history
The first gold mining by man dates back some 6000 years. The places concerned? North Africa, Mesopotamia, the Indus valley and the eastern part of the Mediterranean.
The earliest known gold objects, jewellery in particular, apparently belonged to the Egyptian culture (5000 BC). But it is with the Etruscan and Roman civilisations that we reach the peak of excellence in the production of gold objects, ornaments even before coins. To this day, 50% of the gold market each year is accounted for by the goldsmith industry.
The mask of Agamemnon, (XVI century B.C.)
Gold as a currency of exchange
Gold and silver have always been associated with the concept of exchange currency. The Sumerians apparently based their quotations on the mina, a lb of silver weighing 436 grams. The use of gold and silver as currency, on the other hand, is unclear whether it dates back to the early Chinese dynasties or to the inhabitants of Lydia from the mid 7th century BC.
From that period we have clear evidence of objects made of precious metals on which rulers stamped their seal, a system that was later adopted in Greece. The first coin made of pure gold dates back to 550 BC, it seems. It is interesting to note that silver and gold pieces were also present as a form of payment in Jewish culture: we find an example of this in the Gospel of Matthew when it speaks of the betrayal of Jesus by Judas.
Money thus began to replace barter and to transform the economy of peoples and exchanges between distant and different populations. Gold became the metal universally recognised as an object of value and therefore, an indispensable medium of exchange and social and economic progress.
Gold in recent history
The use of gold as a basis for the valuation of national currencies is very recent, with the adoption of the "Gold Standard System", in which gold became the general equivalent and by which governments fixed the value of the national currency to the value of gold.
The mintage, like the import and export of gold in any form, was free and each nation had its own quotation for the yellow metal.
International trade enjoyed a balance due to the stable exchange rate between the currencies of the various countries.
With the outbreak of World War I, things turned upside down and a period of great instability began. Full convertibility of money into gold was abandoned everywhere except in the United States: the gold reserve now covered only a fraction of the circulating currency, which had risen dramatically to cover war expenses.
In 1924 convertibility was re-established in Germany and in 1925 in Britain, but in 1931, following the economic crisis of 1929, the Gold Standard was suspended.
In 1944, the "Gold Exchange Standard" was born: the representatives of 44 countries set up the International Monetary Fund at Bretton Wood, near Carroll (New Hampshire), a historic event during which the price of the metal was fixed at 35 dollars per ounce and where the states were called upon to pay into the Fund a quota of gold and national currency, affirming the parity between their own currency/gold and between their own currency/dollar, a convertibility suppressed by the Nixon administration in 1971
From 1948 onwards, in the wake of France, several countries began to legalise gold trading.
In the 1960s, the break between supply and demand caused by a dollar crisis led many individuals to buy more gold. It was here that the metal emerged as a safe haven asset in the face of currency instability.
March 1968: the free gold market was born. The price depended on supply and demand.
After a series of moves to devalue the dollar's parity with gold, carried out by the Nixon administration, European states claimed the right to sell gold on the free market. The 'official price' was thus abolished and the International Monetary Fund returned part of the deposited gold reserves to the member countries, while another went to support developing countries. The 'Dollar Standard' system, the current dollar-based system, was thus inaugurated.
Gold has since added to its peculiar characteristics and its function as currency, more specific functions:
- of reserve. For central banks in particular, holding gold means entrusting the metal with the function of a guarantee against the issuance of coins and debts, as well as a reserve function in the event of extreme necessity
- investment . For private individuals, owning physical gold means having a medium- to long-term investment objective to protect themselves against devaluations and uncertainties
- as a 'refuge asset' in situations of economic instability and monetary uncertainty.
- as a consumer good for industrial use, in jewellery or in electronic and medical technology.