History of Gold
Gold has a unique history in the world. As far back as 4000 BC as gold was mined out of the Alps and fashioned into decorative objects. There are traces of sophisticated jewelry and coin as early as 3000 BC in Iraq and gold jewelry buried in the tomb of Djer, king of the First Egyptian Dynasty, in Egypt in 2500 BC.
In 1500 BC, the immense gold-bearing region around Nubia made Egypt a wealthy nation, as gold became the recognized standard of exchange in trade between nations and tribes. Trade goods moved among nations as the Shekel, a coin weighing 11.3 grams, became the standard unit of measure in the Middle East. Gold Prices stabilized around the Shekel allowing trade in ivory, spices, wheat, silk, plants and animals of all kinds between the Middle East and the Far East on trade routes known as the Silk Road, the Royal Road and the Spice Road.
The Bible mentions Egypt giving the Israelites gold jewelry as they escaped from Egypt and slavery. Many gold artifacts have been found through efforts in archeology and museums throughout the world showcase gold coins, gold jewelry, golden statues and even gold leaf on numerous artistic artifacts. The history of gold is made up of adventure involving siege, warfare, bribes, travel, gold stocks and treasures weather real or imagined throughout mankind’s millennia.
Facts About Gold
Some Facts about gold are;
- The chemical symbol for Gold is “Au”
- Gold melts at approximately 1,064 degrees Centigrade or 1,947 degrees Fahrenheit
- Gold weighs 19.3 times more than an equal volume of water
- One troy ounce of gold equals 1.097 ordinary ounces
- One gram of gold equals .03215 troy ounces
- Pure gold (100%) equals 24 karats while 18 karat gold is 75% gold and 25% other metal
- In 1848 Gold was discovered in California starting “The Gold Rush”
- The gold price was established by the Federal Reserve Act of 1913 when notes were to be backed 40% in gold.
- In 1933, Franklin D. Roosevelt prohibits private holding of all gold coins, bullion, gold stocks and gold certificates
- In 1934 the Gold Reserve Act of 1934 gives the government title to all monetary gold and ordered the minting of all gold coins stopped. The gold price is established at $35 dollars per ounce after paying citizens a gold price of $22 per ounce. (leave it to the government to screw the citizens)
- In 1945 a new “gold price” backed US Dollar is set to only 25.5% backed by gold
- In 1967 the South Africans mint the first Krugerand. This one ounce bullion coin becomes a favorite of individual investors around the world
- In 1971 the U.S. terminated all gold sales or purchases and devalues the gold price yet again with $38 dollars now buying one ounce of gold
- In 1973 the U.S. devalues the dollar yet again and sets the gold price at $42.22 per ounce but “dollar selling” continues and the gold price is allowed to “float” against the dollar and the gold price goes to a whopping $120 dollars per ounce.
- In 1974 Americans are permitted to own gold again.
- In January 2011 the gold price in U.S. dollars is over $1,350 oz showing the dollar lost approximately 96% of its value since the Federal Reserve was started in 1913. (Ron Paul’s “End the Fed” takes on new meaning as citizens are tired of fiscal policies that tax them using inflation to take away their purchasing power)
Gold Prices Drive Gold Stocks Higher
Since early 2001 when the gold price was at a low of $255 per ounce gold has gone up to over $1,370 as of this writing in early 2011. With that rise in the gold price has come a rebound in the gold stocks and general promotion of gold coins and bars as a hedge against inflation or currency problems. In fact, strength (or lack thereof) in the U.S. dollar and the Fed’s policy to allow the creation of money and credit coupled with low interest rates has caused a downright stampede into gold stocks and even a mini gold rush as weekend minors pan for gold in the creeks and rivers of the land.
There are several kinds of gold stocks to own. These include the “Majors” such as Newmont Mining and Barrick Gold Corp which are traded on the NYSE (New York Stock Exchange). Mid Tier gold stocks include companies such as Goldcorp, Inc., Yamaha Gold, and Golden Star Resources. Junior gold stocks are the small producers and exploration companies such as Barkerville Gold Mines, Ltd in Canada and Crocodile Gold Corp out of Australia. Normally, regardless of the size, each company benefits when the gold price exceeds their production cost which is normally between $350 and $600 per ounce depending on if they have an open pit or an underground mine.
Whether the Gold Price catches your interest or you want to invest in gold stocks you may want to consider the following”
- Gold is a store of value whether in a shiny gold bar or in reserves in the ground
- Gold is tangible. You can touch it, trade it, store it or ship it
- Gold can be a hedge against inflation or currency debasement
- Gold is in an investment class called precious metals which do have industrial and/or commercial value. Usually they rise and fall in some parity
- Gold has been rising against paper currency for a decade
- Gold prices seem to go up and up but beware…
- Paper gold stocks such as the ETF “GLD” are not necessarily backed directly with gold or gold stocks.
- Gold prices have seen pricing pressure from buyers in India and China where approximately 2.3 Billion people like gold jewelry and are now coming into more and more money as their economies rise out of the 3rd world status and hundreds of millions join their middle classes
Wherever gold prices or prices of gold stocks go, you can be sure that miners will still mine the shiny metal, jewelers will still make and sell all kinds of gold jewelry, stock brokers will buy and sell gold stocks and consumers will see “We Buy Gold” signs around every corner. These are the facts about gold and approximately 6,000 years of man’s history won’t change. We like the yellow stuff and that’s a fact!!
