The history of gold goes wayyyyyyyyyy back.
The history of gold starts in a dense and expanding star cluster about 30,000 light years from the center of the Milky Way galaxy, a gargantuan blue giant star is about to experience its last moments. The huge sun, quite young by celestial standards, has long ago consumed its supply of hydrogen, converting it to heavier helium which dramatically increased its size to more than 100 times that of the little yellow sun that would one day be called Sol. However, this star gobbled up the helium as well, converting it to oxygen, which expanded the red giant into an enormous blue thermal nuclear fireball that would fill our own solar system out to the orbit of Saturn!
This massive blue sun, a star that never had anyone to give it a name because its death throws occurred tens of thousands of years before our own sun ignited, is nearly to the end of its oxygen fuel. However, this is it. The sun has begun to convert the oxygen to carbon and iron, and the density of this matter is beginning to collapse the star even against the indescribable force of the fusion reaction keeping it going.
The star’s most spectacular moment is about to come, and it’ll happen in a matter of moments…
Gravity, that ever present and ever patient master of the universe is about to win. In a matter of moments, the star’s surface begins to rush inward as forces of nature and gravity so powerful mere mortal minds can’t even fathom them finally get their due. After eons of life, this blue star shrinks down to a size no bigger than the earth itself… and then blasts outward in what’s known as a super nova.
An explosion that will be seen tens of billions of years in the future from the other side of the universe. All the energy expended over this star’s life put together doesn’t match the raw power of this final roar of fury. It’s in this cosmic furnace that a virtually miraculous transformation takes place. Metals so precious and so rare that only the death throes of gigantic suns can create them are instantly manufactured from lighter elements and billions of megatons of gold, platinum, palladium, silver and many others are sent hurtling into deep space at respectable fractions of the speed of light.
Thousands of years later, billions of tons of these heavy elements mix with yet another stellar cloud in the nursery and begin to accrete. As a much smaller and much more stable and thus long-lived yellow sun switches on, bathing the new solar system in golden light, planets begin to form. Among these is a ball of molten rock and metal that will someday become our home… and covering it from pole to pole is a very generous slurry of the world’s most valuable metals. Most of these will sink into the molten core, but enough remains just under the surface to drive human civilization onward for tens of thousands of years.
Great men and women will rise and fall because of this sprinkling of stellar debris. Great empires will come to power. Wars will rage. Humans will build their fortunes on what is, in essence, the ashes of the long ago demise of a once mighty star…
Then for a while nothing important happened…
Somewhere around 3,000 B.C. or BCE in the history of gold, ancient people began to make use of this strange yellowish metal that was so shiny and so malleable. Even small amounts of gold could be pounded thin and easily shaped into jewelry and eventually coinage. Gold began to adorn the ancient world, decorating palaces, pouring in seemingly never-ending rivulets over statuary, woodwork and lining the houses and public buildings of the Egyptians, Persians, Romans and Incas alike.
Then, as before, nothing much happened…
During the 19th century, many countries were on the gold standard. They used paper money, but this was primarily as a direct exchange for gold or silver. It was a more convenient way to carry around larger sums. For a long while, the U.S. government set the value of the dollar to slightly less than a gram of gold. Or to put it another way, 1 troy ounce of gold was worth $20 or so.
Then along comes the depression. A pivotal point in the history of gold.
In 1934, the American dollar was devalued and an ounce of gold was now worth $35. Most of the first world governments agreed to manipulate the price of gold in a way that would keep it stable and allow them to maintain gold reserves equivalent to the amount of money in their systems.
However, in 1968, the gold market caused everyone to adopt a system with 2 prices – one that allowed them to settle international accounts at the old $35 value but also allowed private gold prices to fluctuate. This was totally abandoned by 1975 although many governments, including our own, still maintain large gold reserves.
The big break for gold and other metals came in 1971 when Nixon took us off the gold standard.
Gold prices, like other commodities, began to rise rapidly in this period of the history of gold. By 1980, gold was going for $850! Bet you wish you had a few hundred ounces back during Watergate now, eh?
Interestingly, gold and other metals have had a considerable run of ups and downs. For anyone who believes that gold and silver don’t contain the ability to multiply, let me remind you that it wasn’t until the 2000’s that gold increased beyond the 1980 value. In fact, in 1999, gold was trading for $250… and just as silver jumped in 2011, gold did as well, topping out just under $2,000!
Imagine just 20 years ago, you could’ve picked up 100 ounces of gold for what a halfway decent car costs. Then within a dozen years, that gold would’ve octupled in price. That’s 8 times or 800%. Giving you a 2011 value of $200,000!
Has gold, silver, platinum and palladium fallen in value since then? Certainly. Will it rise again? Most probably. And is it vital for you to acquire precious metals for the benefit of the creation, growth and protection of your wealth? We believe strongly that it is.
Remember that our money is now a fiat currency.
The reason that real estate, cars, milk, gasoline and Twinkies continue to rise in price is because of inflation. That’s why granny could feed a family of nine kids on eight cents a month back in nineteen aught seven.
Yet what always has value throughout the history of gold? Those precious metals, forged in the heart of dying suns. Those shiny and malleable metals that man has coveted for countless centuries. Does their value move up and down? Yes… but it’s generally due to the ignorance of those who play the markets. The rule of thumb is this:
When paper assets are popular and trending up, people forget about metal. When it becomes clear that said paper suddenly has far less real value, then suddenly solid metal is once again king.