Gold Has Been Used as a Tool for Wealth Preservation for Thousands of Years
Think about all the different civilizations that have used gold to express wealth and power. From the Incas in Peru to Ancient Egypt, Greece, and Ancient Rome. Gold has been in circulation for so long because it is so durable, scarce, and desirable to many cultures around the world. The History of Gold as Money explores this rich history with plenty of fascinating facts.
One of the many functions that gold has served throughout history is as a medium of exchange. For thousands of years, it was money. Certainly in ancient times, humans used other things to express wealth. Tokens made from other materials or objects with special meaning were also used for trade and commerce. But gold has proven over time to be the most durable and scarce material humans have ever used as money. It’s undoubtedly the best form of wealth preservation.
What is a medium of exchange?
A medium of exchange is any object or substance that can be easily exchanged for goods and services. It has to be so easy to trade, in fact, that people will accept it without too much thought about what it’s worth or what it represents. Gold is in this sense a much better medium of exchange than many other materials, because its value does not wear down over time like paper money or tin tokens do. It can also be counted easily and divided into smaller parts for making payments. Because of this, gold has been used as a currency around the world since at least 600 B.C.
As humans invented new ways to trade and conduct business, gold was always one of the most valued commodities in circulation. Gold became money-or something that represents wealth and is used widely for trade and commerce-because it was one of the few materials that met all of the conditions for serving as a medium of exchange.
It is light in weight, but does not wear down easily over time. It is always scarce (not easy to find) and can be divided into smaller parts that are still recognizable, which makes it very easy to use when trading or making payments of smaller units of wealth. Gold also has a very special meaning for many cultures. It has been loved, admired and coveted for thousands of years. Gold is also one of the few natural elements that can be made into jewellery.
Humans have invented many ways to trade with each other throughout history, but gold has always been a part of the story. In fact, one of the earliest historical records of an exchange of goods for gold occurs in ancient Egypt around the year 2,300 B.C. At that time, a goat herder exchanged his livestock for nine small pieces each worth one-tenth of a pound of gold. Even 4,000 years ago gold was used for wealth preservation.
Ancient Egyptians used gold as money-and so did many other civilizations throughout history. The first coins ever created were made of gold. Ancient Greek and Roman soldiers also used gold to pay for goods and services, as did Chinese traders long ago. There are many other stories from the ancient world that explain how different cultures came to believe that gold was valuable money-and why it has remained one of the most valued commodities in human history for wealth preservation.
Gold is still the ultimate wealth protector.
Gold protects wealth from inflation. One ounce of gold buys more or less the same today that it did 100 years ago or even 1,000 years ago.
Gold protects wealth from being lost or stolen. A gold bar takes up a very small amount of space and can be stored in a secure vault, like the vault at Brinks Inc., for example.
Gold is easy to buy, sell, and invest in. As gold is fungible a gold bar in Singapore can be exchanged for a gold bar in Zurich or London without having to transport it.
Gold can be sold into the market at any time without paying very high commissions or fees. Gold is traded 24 hours per day on global markets. There are a host of exchange traded funds and futures contracts to speculate in gold too. A key element of wealth preservation is liquidity.
The price of gold in 1970 was about $35 per ounce, but today it is worth more than 50 times that amount – about $1,800 per ounce.
Gold has been used as currency for many different civilizations throughout history. From gold coins to gold bars, gold has always been a desirable and valuable asset. Indeed, the ultimate asset for wealth preservation.
Here are 11 things gold is currently used for:
Throughout history gold jewellery has been considered the most desired form of gold by both men and women worldwide.
2) Scientific Equipment:
– gold is used as a coating on mirrors to make them more reflective
– gold crowns are often used on teeth in order to replace missing enamel which can often be brittle and porous. Gold crowns are also used when there is an injury to tooth enamel. It helps protect teeth from further damage like cracking and breaking
4) James Bond Films:
– one of James Bond’s lethal weapons of choice was a gold handgun which he would fire at enemies with gold bullets. This gold gun was manufactured by Charbonnel et Walker, one of the oldest goldsmiths in London. What a great combination of wealth preservation and security!
– gold is often used in sports medals as gold is valued for having very high purity standards with respect to other metals such as silver or bronze. In terms of sports gold comes first, silver second and bronze third. In addition gold is often used to gild trophies in order for them to be more impressive and beautiful than silver or bronze.
– gold foil is used in aircraft instruments which measure electrical charge levels. By using gold foil instead of paper, the readings can be more accurate as gold heats up much less quickly than paper.
– gold is used in electronics for things such as gold plated connectors and gold coated memory chips to prevent corrosion.
8) Space Technology :
– gold is used on space satellites to reflect the sun’s rays when orbiting the earth. This light can then be reflected back down onto the earth using solar panels which are tuned into a specific wavelength of gold.
– gold is used in the manufacture of some drugs such as anti-bacterial agents and often used to treat rheumatoid arthritis and other illnesses.
10) Nuclear Technology :
– gold is used for neutron absorption via a process known as ‘rhenium diboration’. This involves attaching rhenium atoms to a gold nucleus. This process is used to carry out research on nuclear technology and has been developed since the 1950’s.
– gold is used for touch screens as a conductor of electricity which makes it possible to use the device when wearing gloves in winter or at times when you need to type but do not want to have to use a keyboard.
As we can see. Not only is gold good as a store of value for wealth preservation, it also has many practical and industrial uses.
The Weimar Republic
Gold has always been considered valuable due to its rarity and resistance to change with time. This is why it has often been used as a hedge against inflation of currency, especially over long periods of time when countries have had high rates of inflation such as in the Weimar Republic where people were required to carry wheelbarrows filled with paper money in order to buy bread.
Any wise German using gold and ignoring the government issued currency would have preserved his purchasing power as everyone around him became impoverished by the inflation. The same can be said more recently for countries experiencing severe inflation like Venezuela or Zimbabwe. Citizens of those countries using a gold wealth preservation strategy would have profited mightily from the crisis as the price of all goods and services crashed relative to gold.
What are gold coins used for?
The first gold coins were issued by Croesus in Lydia (now part of Turkey) around 600BC. In the book “Das Gold” gold is described as being both rare and malleable so it’s perfect for coinage, gold was a natural choice for currency.
Gold coins are gold bullion coins which can be used to pay someone or redeemed for gold bullion at a gold bullion bank or gold refinery. Gold coins are minted by government or private mints and hold a legal tender gold purity, gold content and gold coin weight. The colour of gold coins may vary from one gold coin to another but most gold coins will have the name of the issuing country or organization on them as well as gold coin weight and gold purity.
Gold bullion coins are considered legal tender by the issuing government however gold bullion coins can be purchased and traded without ever having to go through a gold bank or gold refinery, their value is purely derived from market forces.
Nixon Closed the Gold Window in August 1971
In August 1971 President Nixon was forced to close the so called gold window. At the time, under the Bretton Woods agreement sovereign states could demand that the US redeem US dollars for gold at a price of $35 per ounce.
The problem was that many countries had begun demanding gold instead of paper, and there were not enough gold reserves to back up the US gold certificate system. The gold outflow threatened to destabilize the international monetary system, and Nixon decided to close gold convertibility so as to prevent a run on gold by investors who feared that it was not backed by gold any longer.
A year later in August of 1972 President Nixon took the one step further and abolished gold convertibility for dollars. The gold price was no longer fixed by the government. The price of gold has risen consistently since then.
Storing Gold Offshore for Wealth Preservation
Gold is not a reportable asset for either FATCA or the Common Reporting Standard (CRS). You can therefore store gold in vaults around the world without it being reported to your home country’s government. Gold stored in secure vaults can’t be easily confiscated like bank accounts can. Storing gold offshore is a solid wealth preservation strategy. The gold can be owned by a corporation or a trust to further preserve your wealth if required.
Gold is still the only real money in existence. It’s amazing how stable prices are when you price things in gold. The price of an average house in the USA, according to the Case Shiller long term price index is more or less the same when priced in gold as it was in the early 1900s.
For more assets priced in gold it’s worth having a look at www.pricedingold.com. They have dozens of items priced in gold over decades and even centuries. It’s well worth a look.
That fact alone proves the value of gold in protecting wealth for the long term. It should be the cornerstone of any long term wealth preservation strategy.
For more information on wealth preservation and asset protection see our Special Report – Bullet Proof Asset Protection. It contains a step by step guide on how you can preserve your wealth. It contains detailed instructions for opening gold bullion accounts overseas, transporting gold and setting up offshore companies and trusts to preserve your assets for the next generation. Anybody with assets over 6 figures that they want to preserve must read this report. This report could save you from being wiped out by lawsuits or inflation. You will be able to sleep soundly at night when you have put the detailed strategies into effect.