The History of Gold: From Antiquity to the Present Day
The beauty and traits of gold have captivated humankind since prehistory. Today, it plays major roles in microelectronics, aerospace, and medicine, as well as in jewelry, investments, and the arts. The golden road from Pharaohs to today is filled with interesting events. Come along while we trace the history of gold.
Prehistory (before 4000 BCE)
Gold is presumed to be the first metal worked by humankind. Prehistoric humans likely first discovered gold as gleaming nuggets in streams. Its malleability and luster made it attractive for early decorative uses.
The oldest gold ornaments in the world were discovered in the Chalcolithic (Copper) Age Varna civilization necropolis in Bulgaria. Dating to around 4600 BCE, these pieces of gold jewelry and gold-painted pottery predate the earliest gold finds in ancient Mesopotamia and Egypt by approximately 1,000 years.
Early Antiquity (c. 4000 BCE - 1200 BCE)
Egypt and Sumer both began mining gold and producing jewelry around 3000 BCE. Before this, Egyptians made jewelry from electrum, a natural blend of gold and silver. Gold was mainly reserved for royalty and the social elites early in this era, as seen in the tombs of the Pharaohs and kings of Mesopotamia.
Egypt developed filigree goldworking techniques around 2600 BCE, allowing them to create delicate artworks and jewelry. By this time, trade in gold jewelry had spread across the Fertile Crescent and eastern Mediterranean from the Tigris to present-day Greece.
Around 1500 BCE, Egypt conquered the kingdom of Nubia, giving it control of one of the largest gold-producing regions of antiquity. By 1200 BCE, Egyptian goldsmithing had advanced to the point where gold leaf and lost wax ornament casting was commonplace.
Classical Antiquity (c. 800 BCE - 500 CE)
By the start of Classical Antiquity, gold had established itself as a medium of trade regardless of appearance. King Croesus of the merchant kingdom of Lydia produced the first gold coins of a standard weight and purity around 585 BCE, replacing small gold bars and scraps that had to be weighed individually. After Lydia was conquered by Cyrus the Great, the Persian daric replaced the Lydian stater as the most commonly used gold coin in the region.
While the ancient Greeks mostly used silver coins, the Macedonian gold stater circulated from the Eastern Mediterranean to as far as India thanks to Alexander the Great’s empire-building.
The gold aureus and silver denarius of Rome served as the standard trade currency from the first century BCE until the decline and fall of the Western Roman Empire in 476 CE.
Medieval Period (c. 500 CE - 1500 CE)
The fall of the Western Roman Empire led to an abundance of different gold coins circulating as trade currencies. Some of the more popular early gold coins were the Byzantine solidus and the Islamic gold dinar.
Gold coins were produced by various other medieval kingdoms but often did not circulate at face value due to frequent debasement. This was partially alleviated at the start of the 14th century when London goldsmiths began hallmarking small gold bars
Europe suffered a severe shortage of gold in the late 14th century, known as the Great Bullion Famine, as gold mines were exhausted. Venice’s trade networks allowed it to import gold from abroad, making their gold ducat the most widely used gold coin in Europe
Early Modern Era (1500 CE to 1800 CE)
European conquest of the Americas had one overriding purpose: finding gold. King Ferdinand II of Spain told Christopher Columbus in 1492: “Get gold, humanely if possible, but at all hazards – get gold!” The flood of gold, silver, and jewels from South and Central America caused rampant inflation throughout Europe.
Sir Isaac Newton's work as Master of the Royal Mint in reforming the nation’s coinage culminated in 1717, making Britain the first nation to adopt the Gold Standard. Britain’s prominence in international commerce would make the gold sovereign the first global trade currency.
The 19th Century - Gold Strikes and Gold Standards
The 19th century was the Age of the Gold Rush. There were 25 major gold rushes in the 1800s, with many smaller discoveries. The top five gold rushes of the 19th century, in descending order, were:
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Witwatersrand, South Africa (1886)
This was by far the largest gold rush the world has ever seen. The area is still a major gold-producing region, but not to the extent it was at its peak. -
California, USA (1848-1855)
Perhaps the most famous gold rush. It led to California’s admission as a State of the US. -
New South Wales / Victoria, Australia (1851-1860s)
These twin gold rushes transformed Australia from a remote group of penal colonies into a developed region. -
Klondike, Yukon Territory, Canada (1896-1899)
The Klondike Gold Rush was the last big gold rush in North America. The incredible hardships that gold seekers endured were immortalized in the stories of Jack London. -
Minas Gerais, Brazil (1690s-1820s(?))
The earliest and longest-lived gold rush in the Americas, the Brazilian gold rush lasted 120 years. The Minas Gerais area is still a productive gold mining region.
The Gold Standard
The new abundance of gold enabled most of the industrialized world to transition to a monetary Gold Standard by the last half of the 19th century. Britain was the first nation to adopt the Gold Standard, unofficially in 1717, thanks to Isaac Newton, and formally in 1821. It was the only country on a monometallic gold standard for 50 years.
In 1871, the newly united German Empire used the billions of marks of indemnity extracted from France in the Franco-Prussian War to switch from a silver standard to a gold standard. The rest of Europe was on the Gold Standard by 1883, followed by Russia and Japan in 1897.
The US was the last major nation to officially adopt the Gold Standard in 1900. Only fourteen years later, the Classical Gold Standard ended as Europe descended into war.
Early 20th Century
World War I was the first major war of the Industrialized Age. Governments were forced to abandon the Gold Standard to conduct the large-scale deficit spending required for fighting the war. The global economic boom of the 1920s helped most countries return to the Gold Standard, just in time to be hit with the Great Depression.
The Great Depression
Adherence to the Gold Standard restricted countries’ ability to counter the onset of the depression. This forced countries to abandon the Gold Standard a second time to engage in the heavy deficit spending needed to support their economies.
Widespread hoarding of gold money exacerbated the problem of fighting the depression by shrinking the money supply. Countries responded by pulling gold coins out of circulation and ending the public's ability to exchange paper currency for gold coins on demand.
The United States went further. President Franklin D Roosevelt’s Executive Order 6102 ordered the nationwide confiscation of citizens’ gold. To further aid the government’s ability to respond to the crisis, the dollar was devalued by raising its peg to gold from $20.67 to $35 an ounce. These two laws allowed the Federal Reserve to print more money, as the dollar was legally required to be 40% backed by gold.
World War II
Just as countries were recovering from the Great Depression, they were forced to totally commit their economies to fighting WWII. This led to unprecedented deficit spending, causing recessions and high inflation rates after the war. The US was the only country to survive the war unscathed. In addition, it had demanded payment in gold for goods and war materials before entering the war, and ended up with most of the world’s gold by 1945.
This imbalance in gold reserves led to the creation of the gold exchange standard at the 1944 Bretton Woods monetary conference. Since the US had most of the gold, other countries pegged their currencies to the dollar, which was in turn pegged to gold. The US agreed to redeem dollars for gold at the statutory price of $35/ounce, but only to foreign governments and central banks.
Late 20th Century (1945-2000)
Efforts to support this gold exchange standard culminated in the London Gold Pool of 1961-1968, where central banks sold gold into the open market in an attempt to keep prices near the $35 peg.
High levels of inflation in the US devalued the dollar against other currencies to the point where President Richard Nixon was forced to “close the gold window” in 1971 and stop allowing foreign countries to redeem gold at $35 per ounce.
Central banks started unloading their gold reserves in the 1970s after the dollar lost its peg to gold. They remained net sellers of gold until the Global Financial Crisis. Since then, central bank gold purchases have set new highs several times and have become an important part of gold demand.
Private gold investment demand has also risen with increased financial hazards since gold ownership became legal in 1974. Since 2008, investment demand has followed central bank gold demand.
21st Century
The 21st century saw the growth of de-dollarization sentiment among foreign governments after the US began using control of the dollar as a sanctions tool. This change has been led by China, which has become the largest consumer of gold. Russia accelerated its de-dollarization efforts after having sanctions imposed on it after its invasion of Ukraine.
Western European governments have joined in, demanding the repatriation of their gold from the US and the UK.
Modern Uses For Gold
The rise of electronic devices in the post-war period opened up new uses for gold as cell phones and home computers became popular consumer goods. Increased personal wealth allowed more people than ever to afford gold jewelry. Jewelry remains the largest use of gold, accounting for around half of annual gold demand.
The growth of air travel and the birth of the aerospace sector opened new avenues for gold demand. Gold fulfills various demands in space, from electrical connections to protective astronaut visors to coatings on moving parts to prevent cold welding.
Electronics and microchips use gold for connections and microcircuitry due to its resistance to tarnishing and resistance to oxidation. Gold is also used in medicine for everything from coating artificial joints to using gold nanoparticles to detect and treat cancer.
