Over the years, it has been referred to as the tears of the sun. It has also been used in many things, such as critical ancient offerings to the gods, king's tombs, and even your grandpa's crown filling. It's "Gold", and the word alone carries weight.
Gold has been precious since the very beginning of civilisation. But why exactly is that? How can a shiny little rock be worth as much as the price of a luxury car?
Today, we're going to be answering all your questions relating to gold. From its history, how it became valuable, how rare it is if its value will last further into the modern age, and many others. Let's get started.
According to documentaries, gold has maintained a high value for thousands and thousands of years.
★ Six thousand years ago, in 4,000 BC, gold was already being used in artefacts in Egypt, where some kings wrote that gold was as common to find as dirt.
★ Five thousand years ago, in Mesopotamia, gold was first used in jewellery.
★ In 1091 BC, small squares of gold called "Ying Yuan" were used as currency, followed by the ancient Persians and ancient Greeks using gold coins.
Many Greek philosophers like Plato and Aristotle believed that gold was a dense combination of two things – water and sunlight. Although observations about gold showing up in running water was pretty spot on, science was a bit off.
Scientists believe that all the gold on Earth originated from the explosion of a collapsing star. Yes, that's right. The shiny ring on your finger and that gold tooth in your granny's mouth were created as the result of a supernova that happened billions of years ago.
Gold particles were mixed into the cosmic cloud that formed the Earth, but that gold sank to the centre of our planet, near the core. Over time, the gold peppered throughout the Earth and was brought closer to the surface and deposited in veins by warming and cooling water. As a result of shifting fault lines, some veins surface via erosion, and water carries small golden nuggets from those veins down streams, which explains why gold is often found in moving streams.
For example, the gold flakes found in the American river in 1848 by John Sutter kick-started the gold rush, which brought around 300,000 people to the Golden State in the United States. This event resulted in $81 million worth of gold being mined in less than 10 years.
A couple of decades later, in 1990, the gold standard act was passed, which made gold an asset, backed by paper money. A couple of decades later, Franklin D. Roosevelt made it illegal for US citizens to own more than a small amount of gold, whether in the form of coins or certificates. Citizens were strongly compelled to sell their gold for a $20 per troy ounce to the US treasury, and that gold was then stored in Fort Knox in Kentucky.
In 1975, the golden window was closed, which ended the fixed exchange rate between gold and paper currency and the rules regarding private ownership of gold.
So yes, gold has been through quite a lot over the past 7,000 years, but one important thing has remained the same – gold has always been valued. But why gold? Well, it's mainly because we say it is. And we only say so for a darn good reason.
Firstly, when it came to finding something of value before traditional currency, civilisations had several options. There are 118 elements known to man, but only a few are viable options to be used as a commodity. All of the gases are obviously out of the question. Scary radioactive elements like uranium and plutonium wouldn't be particularly easy to toss in your pocket to use at a local bazaar. Although if we had gone that route, we probably would have had a pretty interesting Zombie apocalypse by now.
Then there are the more reasonable familiar elements like iron, silver, copper, and Titanium, but surprisingly, these have less than desirable characteristics.
Aluminium, which is excellent for wrapping leftover pizza, is much too flimsy to be used in coins or artefacts. On the other hand, Titanium is far too hard to utilise. It can only be smelted at 1000 degrees celsius, and people in ancient Mesopotamia didn't have the technology to make that happen.
Iron and lead – with both plentiful and easy to manipulate, it wouldn't be as valuable as a currency, because well, they rust, and there is far too much of it available.
Abundance is an issue when it comes to value. If everyone had an acre of gold in their front yard, that gold would be about as valuable as the weeds growing alongside it.
On the other end of the spectrum, impossibly rare metals like platinum are also a problem. Because they aren't found widely enough to be used as a currency between cultures and communities.
So that brings us to silver and gold. Both are rare enough to be considered valuable but not so scarce that obtaining them would have been impossible. Silver and gold are malleable and early civilisations aged the precious metals into whatever their hearts desired.
Although gold is malleable, it's pretty much indestructible. That means gold that was used by Mesopotamians still exists today. Every gold mined today will be around for generations.
Another reason gold is so valuable seems less profound, but in reality, it is just as tied to science. Meaning humans like shiny things. We all like glitter, chandeliers hanging from the ceilings of our mansions, and we love shiny gold. Scientists believe that our attraction to shiny things can be linked to our biological interest in water. So next time someone gives you the side-eye for splurging on a new watch or a shiny new car, tell them you can't help it; it's all in your DNA, baby.
So, there are four reasons why gold is so valuable:
(1). It's scarce
(2). Easy to utilise
(3). It's durable and
(4). It's shiny – our favourite part of it all.
But there's one part that we need to dive into just a little deeper – The Scarcity Of Gold.
When we live in a society where you can get gold flakes in your mixed drinks at a casino in a famous city, how scarce can it be? The answer is a bit surprising and a bit more complicated than you may expect. Currently, if you took the world's gold stock and melded it down, it would form a cube measuring about 68 feet on each side. For reference, that beautiful solid gold cube would easily fit inside of a baseball infield. So, in other words, it's not a lot.
47% of the gold in the world is in jewellery, 39% is used in things like coins and bars, while the remaining percentage falls into other categories such as; gold used in technology, building materials, and dental work.
But our supply of gold steadily grows at an estimated 2% per year, and even then, there are millions of tons of gold that we haven't figured out how to access yet. It's estimated that there are at least 20 million tons of gold in our world's oceans. Yes, that's right! Not pounds, tons, and not thousands, but millions.
Forbes estimated that the amount of gold found in our oceans is likely to equal about $771 trillion, and those scientists and people itching to make a quick buck have tried to figure out a way to reach that precious gold. But unfortunately, they haven't quite figured it out just yet, and many believe they never will. Several gold veins are miles underneath the water, and recovering them through mining will be quite an overwhelming task. This leads us to the next question.
What Does The Future Of Gold Look Like?
Online, you'll find several experts arguing about the future of gold, but if the past is any example, it seems as though gold's value is safe. Even though the value of gold can fluctuate negatively in the short term, it can maintain its value for a long time, and it always has. A famous investment manager – Gary Brinson, said, "An ounce of gold bought a fine man's suit in the time of Shakespeare, and so it does today".
If gold's 7,000 years of value indicates its future, it looks as though we could be buying suits on Mars or the Moon with just an ounce of gold.
So, there you have it. The history of gold, the reason it's valuable, and its probable future. Thanks for reading!
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