Gold has a historic reputation for being one of the most highly prized global currencies. For thousands of years, civilizations across the world have looked upon it as a reliable source of funds.
Gold remains a coveted asset among investors today. You can decide if, when and how much gold to buy for your own portfolio by learning about the history of its pricing and what kinds of value it can offer you today.
Earliest Use of Gold as Currency
Historians have traced the use of gold as far back as 3000 BCE in countries like Turkey, India and Egypt. Civilizations like the Hittites, Phoenicians, Chinese, Lydians and Egyptians quickly discovered how versatile it was to work with and what kind of beauty and value it could offer when used for items like cups or jewelry. They actively mined gold to use for such purposes.
However, it was not until 700 BCE that gold became a source of currency. By that time, merchants in Lydia made the first semblance of gold currency to use as a valid payment method. The coins were rough and unrefined in design and combined with electrum, which is a silver mixture.
Later, in 550 BCE, the king of Croesus ordered the first official gold coins be created for use as currency in his kingdom. Other civilizations soon followed suit and created gold coins of their own to use to purchase goods.
Gold remained a standard source of currency for thousands of years until the invention of paper money. Even then, many governments continued to rely on and link gold to the value of any paper money they printed and issued.
The Earliest Recorded Value of Gold
Historians have also discovered some of the earliest recorded values for gold. For example, they learned that in 30 BCE, the Roman emperor Augustus set the value for gold per pound at 40 coins. That is, if someone wanted to buy a pound of gold, it would cost them 40 coins. Likewise, if someone in those days wanted to sell gold, they would receive 40 coins for each pound of gold they sold.
Around 200 years later, the Roman emperor Marcus Aurelius set the price of gold per pound at 50 coins. These earliest recorded values of gold indicate the influence it has on people’s wealth and how much buying power they could have if they purchased or sold gold.
In fact, history also reveals that the debasement of gold during the Roman empire caused the empire’s economy to fluctuate dramatically. Historians believe the devaluing of gold during the reign of Marcus Aurelius caused a period of hyperinflation. They also believe this devaluation contributed to the fall of Rome.
The Use of Gold in the U.S.
The use of gold in the United States goes as far back as a few decades after the American Revolution. In fact, its first recorded price in the U.S. dates to 1792, where it held a value of $19.39 per troy ounce.
Gold held this value all the way until 1834, when the U.S. began relying on a monetary system. That year, gold increased in price to $20.69 per troy ounce.
Of course, gold remained a highly coveted asset after 1834. The Gold Rush in 1848 caused a rush of gold diggers to the mill of John Sutter, just north of Sacramento, California. The gold miners harvested more than $2 billion dollars’ worth of gold, or more than 750,000 pounds, in a rush that lasted until 1852.
Today, about half of the gold bullion in the possession of the U.S. Treasury remains housed at Ford Knox in Kentucky. More than 143 million ounces, or more than $200 billion worth of gold, is stored there, with very little being added to the depository since 1937. Most of the gold bars there weigh 27.5 pounds.
Earliest Gold Values in the U.S.
As noted, the first recorded values of gold in the U.S. date to 1792 at $19.39 per troy ounce. That value held in place until 1834 with the informal introduction of the American monetary system. Gold then increased in value to $20.69, give or take a few cents, for the next 100 years, ensuring that the value of American paper money was tied directly to the current price of gold.
However, in 1900, the formalization of the gold standard came about with the Gold Standard Act. This act was meant to stabilize the value of paper money in the U.S. and required the government to have possession of gold that equaled at least 40 percent of the currency that it printed. The price of gold by that time had become fixed at $20.67 per ounce.
The financial crisis in 1933 resulted in Roosevelt suspending the gold standard to prevent Americans from converting all of their paper money into gold. It was not until 1974, under the administration of Gerald Ford, that Americans could legally own gold again. In 1984, Reagan authorized the minting of the first gold coin, the first time in more than 50 years.
Gold Prices in the U.S. over the Last 200 Years
The earliest recorded values of gold in the U.S. barely reached $21 per ounce for close to 100 years. It was not until 1934 that the price of gold got above $35 per ounce. Prices remained in the $30 range throughout the 1940s, except for a brief period in 1947, 1948 and 1949 when gold reached above $40 per ounce.
The next three decades after World War II saw gold remain in the $40 to $50 range per ounce. It was not until 1972 that gold bounced to more than $60 per ounce and soared over the $100 per ounce mark in 1973. The bull market of the 1970s sent gold prices soaring to new heights, reaching a high price of $459 per ounce in 1979. As stocks devolved into a bear market in the early 1980s, gold sank considerably in price, lowering to $308 in 1984.
Gold continued to fluctuate between the mid-$300 range to $400 and slightly above for the remainder of the 1980s. Prices were nearly identical for the greater part of the 1990s, although in 1997, gold sank in value to $287 per ounce. Prices fell even lower, around the $276 range, in the first two years of the new millennium.
It was not until 2003 that gold rose above $400 per ounce again. Since then, gold prices have risen exponentially, topping more than $1000 per ounce for the first time in 2009. By 2012, the gold prices had reached more than $1600 an ounce.
Gold now commands more than $2000 an ounce. This price makes it a lucrative asset to invest in and one that can greatly diversify and add value to your wealth-building or retirement portfolio.
Reasons to Keep Track of Gold Prices Today
Whether you are a beginner investor or one who has been investing money in commodities like gold for years, it is vital that you understand the historical performance of gold and what kind of price it sells at today. When you keep track of gold prices, you equip yourself with the knowledge you need to determine if you want to buy or sell gold and in what quantities.
You can also use the historical values of gold to predict if and when it may rise or sink in price, given the current economic factors. You can plan accordingly to protect your portfolio’s value and minimize your losses in the market. You can also take action to safeguard your purchasing power in any economic condition.
Gold has long been a highly prized source of currency around the world. From the early Egyptians and Lydians to modern-day Americans, people throughout time have relied on gold to build wealth and acquire goods.
When you plan on adding gold to your own portfolio, you can plan accordingly and decide if and when to invest in it by keeping track of its prices. You can also lend to your own purchasing power and minimize losses by understanding gold prices.
