Gold is perhaps the best-known medium of value and exchange, on the value of which one can hardly disagree. It has accompanied humanity since the early civilizations honoring gold as a symbol of status and tribute to the gods. The oldest gold treasures found by archeologists are dated back to 4600-4200 BC; golden relics and accessories were universally respected by rulers and rich people across the globe, from ancient Egyptians to Aztecs, ancient China, and the Roman Empire.
The earliest record of using gold as an official currency is dated around 550 BC, the moment when gold coins were minted on the order of King Croesus, the ruler of Lydia (territory of modern Turkey). Around the same time, Darius the Great, ordered the minting of gold coins called “darics” for circulation in the Persian Empire. This tradition persisted for many centuries, with the modern states ceasing to use golden coins in circulation only in the 1930s, after the Great Depression that brought many changes to the global economy.
The Gold Standard
The term “gold standard” refers to the establishment of the gold coinage tradition in the British Empire dating back to the early 17th century. Gold coins were minted to sustain the British financial system and finance the country’s operations worldwide.
A similar piece of legislation was passed in the USA in 1792, termed The Mint and Coinage Act. The law set a fixed price of gold in US dollars, which underwent a series of changes in later years. The USA was the last country to use the gold standard and refused it only in 1973 – many years later than other states shifting to fiat (aka paper) money in national and international transactions.
Why Is Gold Valuable?
So, what makes gold specifically interesting for investors as an asset of unique value? Several characteristics distinguish gold from other rare metals and place it in a distinct position:
- Gold has historically been associated with wealth, power, and high status.
- It has been used since ancient times in precious jewelry and accessory production.
- Gold plays an essential economic role as an alternative means of exchange for a potential economic collapse situation.
- Gold is a rare, finite metal posing serious mining challenges.
- Gold’s malleability and unique physical properties make it applicable in electronics, medical equipment production, aerospace manufacturing, and the automotive sector.
- This metal is visually appealing and not subject to corrosion.
The combination of these factors has contributed to gold’s persistent superiority in the list of top-valued precious metals around the world. Yet, the form of gold ownership is changing together with the community – its primary appreciators, holders, and investors. As times change, so do the gold investment forms and opportunities discussed below.
Gold in the 21st Century: New Forms of Ownership and Trading
There have been many limitations to gold ownership and investment in the past centuries. For instance, owning physical gold was regarded as illegal in the United States until the 1970s. Only the 1975 changes to the Gold Reserve Act legalized this practice and allowed Americans to purchase physical gold for ownership. Buying and storing bullion gold is still subject to regulations in many countries, so people choose alternative forms of gold investments, such as:
- Collector coins. Coins minted from gold have a numismatic value combined with the net weight of gold. Such coins may cost more than the gold weight they include if they’re rare enough or belong to renowned collections.
- Gold-backed stocks and ETFs. Gold-backed ETFs emerged in 2004, and the present-day investor has a wide variety to choose from.
- Gold-backed IRAs. Individual retirement accounts can also be gold-backed; some famous IRA providers with gold-backed value include American Bullion, American Precious Metals Exchange (APMEX), and JM Bullion, among others.
- Tokenized gold. As blockchain technology gains momentum, gold-backed tokens steadily take the ground as a tech-powered alternative to securities and physical gold. These tokens offer transparency and safety along with investor flexibility.
Tokenized gold is the new word in the world of gold investment, suggesting a completely new era of gold investment history. It is a more flexible and affordable alternative to physical gold or gold-backed securities empowered by blockchain. Projects like Clinq.Gold can give any user access to a fraction of gold reserves, shaping the future of gold ownership in more democratic terms.
CEO & Founder at Clinq.Gold, Bank of Bullion | Keynote Speaker