Gold was first discovered more than 5,000 years ago
Gold has always had value to us, even before it was money. This is demonstrated by the extraordinary efforts made to obtain it. Prospecting for gold was a worldwide effort going back thousands of years, even before the first money in the form of gold coins, appeared about 700 B.C.
In the quest for gold by the Phoenicians, Egyptians, Indians, Hittites, Chinese, and others, prisoners of war were sent to work the mines, as were slaves and criminals. And this happened during a time when gold had no value as ‘money,’ but was just considered a desirable commodity in and of itself. Power and the presence or ownership of gold went hand in hand.
Gold jewelry was found already in the Tomb of Djer, a king in the first Egyptian Dynasty around 2500 BC. The tomb of Tutankhamen from the 14th century BC contained the largest found collection of gold and jewelry in the world.
Gold was first used as coins and currency in 564 BC
It was not until the Lydians that gold was used as coinage and currency in 564 BC. The Kingdom of Lydia, located in what is now western Turkey, was the first nation to use gold and its alloys to create and use as a system of trade.
The Greeks mined for gold throughout the Mediterranean and Middle East regions in 550 B.C. Later, the ancient Greeks also used gold as a form of currency and a sign of status and wealth across their nation. Gold, they believed, was associated with the numerous gods and demigods of their culture. A mortal who possessed gold, therefore, possessed wealth and a higher social status.
Their science may have been primitive, but the Greeks learned much about the practicalities of gold mining. By the time of the death of Alexander of Macedon (323 B.C.), the Greeks had mined gold from the Pillars of Hercules (Gibraltar) all the way eastward to Asia Minor and Egypt, and we find traces of their placer mines today. Some of the mines were owned by the state, some were worked privately with a royalty paid to the state. Also, nomads such as the Scythians and Cimmerians worked placer mines all over the region. Much early organized gold mining took place in placer mines, where alluvial deposits drawn from gravel or streambeds were flowed with water. Being much heavier than the surrounding materials, gold settled to the bottom and was captured. This is the same concept that gold panners employed in later gold rushes, but on a much larger scale.
The first widespread gold currency
The Roman Empire furthered the quest for gold. The Romans mined gold extensively throughout their empire and advanced the science of goldmining considerably. They diverted streams of water to mine hydraulically and built sluices and the first ‘long toms.’ They mined underground, also, and introduced waterwheels and the ‘roasting’ of gold-bearing ores to separate the gold from rock, allowing them to exploit old mine-sites more efficiently. While the Romans were by no means the first to use gold in their coins, they were the first to make gold coins a widespread currency. Before their time, gold coins were far less common than coins made of other metals. This is because there had never been a supply of gold large enough to warrant this expansion.
A monetary standard made the world economy possible
The concept of money, (i.e., gold and silver in standard weight and fineness coins) allowed the World’s economies to expand and prosper. During the Classic period of Greek and Roman rule in the western world, gold and silver both flowed to India for spices, and to China for silk. At the height of the Empire, Roman gold and silver coins reigned from Britain to North Africa and Egypt. Money had been invented and taken into use.
A gold standard; fixed currency value for gold
Great Britain was the first country to create a gold standard: a fixed currency value for gold based on weight. Other countries, including the United States, followed suit.
The United States passed its Mint and Coinage Act in 1792, which shared a fixed price for gold in US dollars. With this, gold and silver became legal currency for the United States.
Gold exchange standard was created after the World War
In 1944, allied power leaders saw the need to meet in order to figure out the financial order after the World War had ended. A conference was held in Bretton Woods, New Hampshire where it was decided that a gold exchange standard would be created in which gold prices would be fixed to the US dollar. This meant that all other nations would fix their gold exchange rates based on the dollar.
The United States was ultimately chosen due to its strong economy emerging from the World War, and the decision to peg gold prices to the US dollar ultimately helped the United States come into the global superpower role it knows today. The fixed gold price was set at $35 per ounce of gold.
The role of gold today
When Bretton Woods ended in 1971, using gold as an investment became more popular, and the price has been anything but steady since then. Additionally, no country in the world currently uses a gold standard to back their currency. Most countries contain their gold in large reserves.
While gold is still used to produce coins, jewelry, medals, and other tokens, modern science has discovered numerous other uses across various industries. Gold is used in numerous electronic devices including computers, cell phones, and televisions. Additionally, gold is used to create dental appliances, for certain medical treatments, and for aerospace mechanics.