The History of Gold

We do not know when man first came into contact with gold or began to appreciate the unique qualities of the yellow metal as its origins are lost in the mists of antiquity.

Small fragments of gold have been found in the caves of Paleolithic Man who existed some 35-40000 BC. It is not known whether these primitive forebears of ours appreciated the value or properties of the yellow metal.

It is well known that the ancient Egyptians used gold for their personal jewelry and the adornment of their temples and tombs so they clearly appreciated its value and yet it was not as currency or as the basic medium for exchange.

The first recorded evidence of the use of gold in coinage dates from circa 700 B.C. in Eastern Europe and gradually spread throughout the civilized cultures of the known world. At this happened nations and states could measure their prosperity by the gold they accumulated, whether by trading or war, and this continues to the present day.

The Spanish Conquistadores sent vast amounts of gold back to their homeland in the fifteenth and sixteenth centuries from their possessions in the new world of Central and South America which led to Spain becoming the wealthiest nation in Europe for many decades until overtaken by Britain and France whose territorial gains and trading spread across the globe.

As these empires went into decline in the early 1900’s so the USA grew into the worlds most powerful trading nation and as a consequence it’s gold reserves accumulated, strengthening the US Dollar to the extent that it became the worlds reserve currency and is the benchmark for trading oil and other commodities.

Owing to the overwhelming strength of the US economy it was able to untie the traditional link between gold and the value of currencies by floating the dollar and consequentially other currencies in an attempt to revive US (and international!) trade.

The value of gold quickly trebled in value against the US$, Five years later in 1980 gold reached an all time high of US$ 850.00 an ounce which to this day has not been breached.

After the speculators had their day a long-term gradual decline took over at a time when politicians and bankers played down the merits of holding gold as a hedge against currency fluctuations.

A memorable consequence of this was the announcement by the UK’s Chancellor of the Exchequer, Gordon Brown, to sell off a substantial tonnage of Britain’s gold reserves over a period of time.

The announcement came when gold was near a bottom and only served to depress the price even further.

Mr Brown somehow enjoys the reputation of a prudent chancellor despite not having the elementary trading skills and common sense to have realized the consequences of his well broadcast actions – and he could be the next UK Prime Minister and US puppet!

Empires come and go, trading nations have their day and nobody knows for sure how long today’s strong economies will last before going into a decline but it must always be remembered that gold, and only gold, has remained untouchable as the benchmark test of prosperity for nations and individuals alike despite attempts to play down it’s importance.

This is why the emerging trading nations such as China and India are increasing their gold reserves whenever opportune trading circumstances arise and their citizens measure their individual prosperity by the amount of gold, usually in the form of jewelry or negotiable coins, that they own.

Russia, which has huge untapped mineral resources and is a major oil exporter has emerged from the dark days of communism and is becoming a dominant trading nation, is reported to be keen to accumulate more reserves of the precious yellow metal.

Gold is coming back into it’s own as the traditional economies of the world are showing increasing signs of unraveling.

The problems caused by the excessive printing of more and more paper money, low interest rates and easy borrowing criteria to provide short term solutions to sustaining buoyant economic activity are becoming more and more apparent with each passing day.

Manufacturing and retailing are becoming evermore affected by restrictive legislation imposed by governments without considering the inevitable consequences to employment, it seems only the unproductive service industries are as yet showing little sign of a downturn in activity.

Despite the attempts by governments to mask the true levels of inflation most westerners are very aware that that the banknotes in their pockets are buying less and less of life’s essentials.

Is it any wonder then that the precious yellow metal is enjoying a strong revival, there are those analysts that believe that the price of an ounce of gold will exceed US$1000.00 by the end of 2006 and will continue to rise in the foreseeable future

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