Many decades have passed but gold remains a highly valuable precious metal in the world. It has been playing a crucial role in the world’s financial systems. Today, gold is different from other commodities as it is valuable in the industry.
Almost all business sectors incorporate gold in the products and services to provide state-of-the-art quality items, tools, etc. Some of these sectors include electronics, jewelry shops, and dentistry. This is the reason why it has a high price and extremely great value.
The Gold Standard History
Thousands of years ago, gold has become a medium of trade because of its remarkable qualities. It has been reported that the very first known gold use was way back 643 B.C. and it had been a currency choice in Lydia, which is now Turkey. Lydians know that gold has been a part of the electrum, a kind of naturally occurring compound.
Later on, they finally learned to separate silver from gold, helping them create the first pure gold coin. It was Croesus, the very first king who used gold coins. During this era, the coin value had been dependent on the metal value within. Any country that possessed most gold would be the wealthiest.
This was the reason why England, Spain, and Portugal sent Columbus, along with other explorers, to a place called the “New World”. They were looking for gold for them to become widely renowned as the wealthiest among the rest of the countries.
In 1944, it was the time when the United States had the greatest amount of gold kept across the world. Due to this reason, many countries had just pegged their currency’s value to the US dollar currency instead of gold. For central banks, they remained to be fixed exchange rates when it comes to dollars and their currencies.
As the years passed by, the gold standard has been through changes and transformations. In August 1971, it has finally ended. It was the time when the American President in the year 1970 has changed the gold and dollar relationship to $38 in each ounce. He was known as President Nixon and he prohibited the Fed of redeeming dollar currency with gold.
In other words, it has made this gold standard thing becoming less meaningful. The government then had to change the pricing of the gold amount to $42/ounce. It took place in 1973 and three years after, it has decoupled the dollar’s value and gold altogether.
The Gold Value Remains
As soon as there is a drop in the gold standard, various countries from all over the world have been printing more of their currencies which resulted in inflation. But looking at the bright side, gold standard abandonment has paved the way for economic growth.
Although these changes took place many years ago, gold has never become less appealing as an ideal form of real value asset. Every time inflation or recession occurs, investors would turn to this precious commodity to save them for financial struggles.