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History of Gold

There are three reasons why people have alwasy placed a high value on gold: its beauty, its usefulness, and its scarcity. Gold is a soft yellow metal. It is one of the heaviest elements, 200 cubic centimeters weights over 540 kilograms. Gold is also one of the most easily worked metals. It is so easy to hammer and shape that less than one gram of gold can ge beaten into a sheet two meteres square. Unlike other metals, gold does not tarnish in the presence of air and can remain bright and shiny for ever. And this is probably one of the reasons why people have always valued it.

Gold has been mined and used for centuries. In the United States, gold fever reached its height in the 19th century. 1848 saw the start of the California gold rush. More than $500 million in gold was to be mined in California over the next decade. In 1896, a similar gold rush occurred in Alaska. The worlds largest gold deposits were discovered in South Africa in 1886. These deposits are still being mined for gold, diamonds, and many other minearls even today.

The most common use of gold has always been as money. Money is not a metal coin or a piece of paper. These are only symbols but they represent something tangible. Although coins have also been made of metals other than gold, their value was often questioned but this was never the case with gold (in to some extent silver) coins. By the early 1900s gold (along with silver) was the measuring stick for almost all of the currencies of the world. This meant that dollars from the United States, Sovereigns from Great Britain and its colonies, Francs from France, marks from Germany and so on - all had a value in terms of their gold or silver content. And at any time the currencies could be changed/exchanged for gold. In other words, the paper money and coins were issued as money by governments and it was understood that each unit of this money was backed by a certain amount of gold or sivler held in "reserve".

By 1933 the United States abandoned the gold reserve and today no major currency is backed by gold, silver, or any other commodity. This often brings up the concern regarding the creation of paper money out of "thin air" and the adverse effects this has on the purchasing power and financial viability of the people. It is one reason why gold and silver coins and bullion are regarded as a hedge against inflation, uncertainty and as a long lasting medium of value.


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