Gold Historical Background Edit
Gold has a long and complex history. From gold’s first discovery, it has symbolized wealth and guaranteed power. Gold has caused obsession in men and nations, destroyed some cultures and gave power to others.
Archaeological digs suggest the use of Gold began in the Middle East where the first known civilizations began. The oldest pieces of gold jewelry Egyptian jewelry were found in the tomb of Queen Zer and that of Queen Pu-abi of Ur in Sumeria and are the oldest examples found of any kind of jewelry in a find from the third millennium BC. Over the centuries, most of the Egyptian tombs were raided, but the tomb of Tutankhamen was discovered undisturbed by modern archaeologists. Inside the largest collection of gold and jewelry in the world was found and included a gold coffin whose quality showed the advanced state of Egyptian craftsmanship and goldworking (second millennium BC).
The Persian Empire, in what is now Iran, made frequent use of Gold in artwork as part of the religion of Zoroastrianism. Persian goldwork is most famous for its animal art, which was modified after the Arabs conquered the area in the 7th century AD.
When Rome began to flourish, the city attracted talented Gold artisans who created gold jewelry of wide variety. The use of gold in Rome later expanded into household items and furniture in the homes of the higher classes. By the third century AD, the citizens of Rome wore necklaces that contained coins with the image of the emperor. As Christianity spread through the European continent, Europeans ceased burying their dead with their jewelry. As a result, few gold items survive from the Middle Ages, except those of royalty and from church hoards.
In the Americas, the skill of Pre-Columbian cultures in the use of Gold was highly advanced long before the arrival of the Spanish. Indian goldsmiths had mastered most of the techniques known by their European contemporaries when the Spanish arrived. They were adept at filigree, granulation, pressing and hammering, inlay and lost-wax methods. The Spanish conquerors melted down most of the gold that they took from the peoples of this region and most of the remaining examples have come from modern excavations of grave sites. The greatest deposits of gold from these times were in the Andes and in Columbia.
During the frontier days of the United States news of the discovery of gold in a region could result in thousands of new settlers, many risking their lives to find gold. Gold rushes occurred in many of the Western States, the most famous occurring in California at Sutter’s Mill in 1848. Elsewhere, gold rushes happened in Australia in 1851, South Africa in 1884 and in Canada in 1897.
The rise of a gold standard was meant to stabilize the global economy, dictating that a nation must limit its issued currency to the amount of gold it held in reserve. Great Britain was the first to adopt the gold standard in 1821, followed, in the 1870s, by the rest of Europe followed. The system remained in effect until the end of the first world war, after which the US was the only country still honoring the Gold Standard. After the war, other countries were allowed to keep reserves of major currencies instead of gold. The arrival of the great depression marked the end of the U.S. export of gold in the 1930s. By mid 20th century, the US dollar had replaced gold in international trade.
The American Eagle Bullion program was launched in 1986 with the sale of gold and silver bullion coins. Platinum was added to the American Eagle Bullion family in 1997. A bullion coin is a coin that is valued by its weight in a specific precious metal.
A Brief History Of Gold Edit
A child finds a shiny rock in a creek, thousands of years ago, and the human race is introduced to gold for the first time.
Gold was first discovered as shining, yellow nuggets. "Gold is where you find it," so the saying goes, and gold was first discovered in its natural state, in streams all over the world. No doubt it was the first metal known to early hominids.
Gold became a part of every human culture. Its brilliance, natural beauty, and luster, and its great malleability and resistance to tarnish made it enjoyable to work and play with.
Because gold is dispersed widely throughout the geologic world, its discovery occurred to many different groups in many different locales. And nearly everyone who found it was impressed with it, and so was the developing culture in which they lived.
Gold was the first metal widely known to our species. When thinking about the historical progress of technology, we consider the development of iron and copper-working as the greatest contributions to our species' economic and cultural progress - but gold came first.
Gold is the easiest of the metals to work. It occurs in a virtually pure and workable state, whereas most other metals tend to be found in ore-bodies that pose some difficulty in smelting. Gold's early uses were no doubtornamental, and its brilliance and permanence (it neither corrodes nor tarnishes) linked it to deities and royalty in early civilizations .
Gold has always been powerful stuff. The earliest history of human interaction with gold is long lost to us, but its association with the gods, with immortality, and with wealth itself are common to many cultures throughout the world.
Early civilizations equated gold with gods and rulers, and gold was sought in their name and dedicated to their glorification. Humans almost intuitively place a high value on gold, equating it with power, beauty, and the cultural elite. And since gold is widely distributed all over the globe, we find this same thinking about gold throughout ancient and modern civilizations everywhere.
Gold, beauty, and power have always gone together. Gold in ancient times was made into shrines and idols ("the Golden Calf"), plates, cups, vases and vessels of all kinds, and of course, jewelry for personal adornment.
The "Gold of Troy" treasure hoard, excavated in Turkey and dating to the era 2450 -2600 B.C., show the range of gold-work from delicate jewelry to a gold gravy boat weighing a full troy pound. This was a time when gold was highly valued, but had not yet become money itself. Rather, it was owned by the powerful and well-connected, or made into objects of worship, or used to decorate sacred locations.
Gold has always had value to humans, even before it was money. This is demonstrated by the extraordinary efforts made to obtain it. Prospecting for gold was a worldwide effort going back thousands of years, even before the first money in the form of gold coins appeared about 700 B.C.
In the quest for gold by the Phoenicians, Egyptians, Indians, Hittites, Chinese, and others, prisoners of war were sent to work the mines, as were slaves and criminals. And this happened during a time when gold had no value as 'money,' but was just considered a desirable commodity in and of itself.
The 'value' of gold was accepted all over the world. Today, as in ancient times, the intrinsic appeal of gold itself has that universal appeal to humans. But how did gold come to be a commodity, a measurable unit of value?
The Incas referred to gold as the "tears of the Sun."
Homer,in the "Iliad" and "Odyssey," makes mention of gold as the glory of the immortals and a sign of wealth among ordinary humans. In Genesis 2:10-12, we learn of the river Pison out of Eden, and "the land of Havilah, where there is gold: and the gold of that land is good?"
As far back as 3100 B.C., we have evidence of a gold/silver value ratio in the code of Menes, the founder of the first Egyptian dynasty. In this code it is stated that "one part of gold is equal to two and one half parts of silver in value." This is our earliest of a value relationship between gold and silver.
In ancient Egypt, around the time of Seti I (1320 B.C.), we find the creation of the first gold treasure map now known to us. Today, in the Turin Museum is a papyrus and fragments known as the "Carte des mines d'or." It pictures gold mines, miners' quarters, road leading to the mines and gold-bearing mountains, and so on.
Where is that gold mine located? Well, you know how it is with treasure maps - there's always something a little vague about them, to throw you off the trail.
Modern thought is that it portrays the Wadi Fawakhir region in which the El Sid gold mine is located, but the matter is far from settled. Jason and the Argonauts sought the Golden Fleece around 1200 B.C.
That Greek myth makes more sense when you realize that the fleece that it refers to is the sheep's fleece used in the recovery of fine placer gold.
Early miners would use water power to propel gold-bearing sand over the hide of a sheep, which would trap the tiny, but heavy, flakes of gold. When the fleece had absorbed all it could hold, this 'golden fleece' was hung up to dry, and when dry would be beaten gently so that the gold would fall off and be recovered.
This primitive form of hydraulic mining began thousands of years ago, and was still being used by some miners as recently as the California gold rush of 1849.
The first use of gold as money occurred around 700 B.C., when Lydian merchants produced the first coins. These were simply stamped lumps of a 63% gold and 27% silver mixture known as 'electrum.' This standardized unit of value no doubt helped Lydian traders in their wide-ranging successes, for by the time of Croesus of Mermnadae, the last King of Lydia (570 -546 B.C.), Lydia had amassed a huge hoard of gold. Today, we still speak of the ultra-wealthy as being 'rich as Croesus.
Gold, measured out, became money. Gold's beauty, scarcity, unique density (no other metal outside the platinum group is as heavy), and the ease by which it could be melted, formed, and measured made it a natural trading medium. Gold gave rise to the concept of money itself: portable, private, and permanent. Gold (and silver) in standardized coins came to replace barter arrangements, and made trade in the Classic period much easier.
Gold was money in ancient Greece. The Greeks mined for gold throughout the Mediterranean and Middle East regions by 550 B.C., and both Plato and Aristotle wrote about gold and had theories about its origins. Gold was associated with water (logical, since most of it was found in streams), and it was supposed that gold was a particularly dense combination of water and sunlight.
Their science may have been primitive, but the Greeks learned much about the practicalities of gold mining. By the time of the death of Alexander of Macedon (323 B.C.), the Greeks had mined gold from the Pillars of Hercules (Gibraltar) all the way eastward to Asia Minor and Egypt, and we find traces of their placer mines today. Some of the mines were owned by the state, some were worked privately with a royalty paid to the state. Also, nomads such as the Scythians and Cimmerians worked placer mines all over the region. The surviving Greek gold coinage and Scythian jewelry both show superb artistry.
The Roman Empire furthered the quest for gold. The Romans mined gold extensively throughout their empire, and advanced the science of gold-mining considerably. They diverted streams of water to mine hydraulically, and built sluices and the first 'long toms.' They mined underground, also, and introduced water-wheels and the 'roasting' of gold-bearing ores to separate the gold from rock. They were able to more efficiently exploit old mine-sites, and of course their chief laborers were prisoners of war, slaves, and convicts.
A monetary standard made the world economy possible. The concept of money, (i.e., gold and silver in standard weight and fineness coins) allowed the World's economies to expand and prosper. During the Classic period of Greek and Roman rule in the western world, gold and silver both flowed to India for spices, and to China for silk. At the height of the Empire (A.D. 98-160), Roman gold and silver coins reigned from Britain to North Africa and Egypt. Money had been invented. Its name was gold.
History & Culture Edit
One reason why gold is so revered throughout the world is that it’s got such an incredible history. From the ancient Egyptians to James Bond, from Homer’s ‘Odyssey’ to the Californian gold rush, gold has played a fascinating part in world history and culture for thousands of years.
Russian Orthodox gold icon depicting the Mother of God, St Iver and St Alexis , Moscow, Russia, 19th century.Enlarge >>
To help it all make sense, we’ve put together an overview, tracing the major people and events that shaped the history of gold. Chapters on the ancient civilizations (pre 400 AD), the middle ages (400 – 1400), the early modern years (1400 – 1800) and the modern period (1800 onwards) describe the eventful story of gold. You can also find some more detailed articles on pre-Columbian gold and gold production since the 1848 gold rush.
Pre-Columbian Gold Edit
Chavin & Chimu The Chavín were an Early Horizon civilization that existed in present-day Peru. They’re thought to have developed around 900 BC and died out around 200 BC, after laying the cultural foundation for the other Peruvian civilizations to come. The Chavin worked their gold by hammering it into fine sheets which could be cut with stone shears, then decoratively embossed. The gold was naturally very pure and enabled the ancient pre-Columbian craftsmen to progress quickly to discovering metallurgical techniques. Between 500 BC and 500 AD, the Nazca society developed in southern Peru. Their goldsmiths continued to create pieces by hammering, but they also discovered casting. This involved melting the gold and pouring it into a mould (usually ceramic), before the article was finished by polishing and burnishing. The Chimu Empire (from 1150 to 1450 AD) developed from the northern Peruvian tribes, and is thought to have been exposed to Mexican influences. They learned the technique of lost wax casting, and the craft of filigree (using metal threads produced by rolling wire under tension). They also developed plating using an alloy of 70% copper and 30% gold. Incas & Aztecs When the Incas conquered the Chimu in the mid-fifteenth century, the Chimu held gold in high esteem; the sun was a deity, and gold was considered to be ‘the sweat of the sun’. In their efforts to provide more gold for the artisans, the Incas developed mining techniques beyond the simple excavations dug into the mountains by their predecessors. Hernan Cortes of Spain reached Mexico in 1519. His weapons alarmed Emperor Montezuma of the Aztecs who, hoping to make friends with the newcomers, offered them priceless gifts of gold. But his attempts were futile and Cortes, not satisfied, advanced into the main settlement of the Aztecs, defeated Montezuma, and seized his vast gold treasure. A few years later, in 1531, Francisco Pizarro invaded Peru and captured the ruler of the Incas, Atahualpa. As ransom, the latter offered to fill the prison room ‘once with gold and twice with silver’. Over the next four months nearly eight tonnes of gold were accumulated but, in return, Pizarro had Atahualpa strangled in public. In order to ship the gold back to Spain, Pizarro had most of the beautiful artefacts melted down. South American plunder became Europe's prime source of gold and relatively few of the ancient treasures remain. Once the hoards of artefacts from the New World were exhausted, the supply of gold petered out. The conquerors had neither the skills nor the manpower to maintain the Inca mines or locate and exploit new ones. But the economy of Western Europe had been transformed, at the incalculable expense of almost three thousand years of cultural achievement and the destruction of an ancient civilisation.
The ancient world (pre 400 AD) Edit
In the quest for gold by various ancient civilizations, prisoners of war were sent to work the mines, as were slaves and criminals, all during a time when gold had no value as 'money,' but was just considered a desirable commodity in itself.
Detail from a panel on a gold plated shrine from the tomb of Tutankhamun. Cairo Museum Enlarge >>
Egypt As anyone who has seen or heard about the incredible treasures of Tutankhamen probably knows, Ancient Egypt left a rich legacy of gold. Hieroglyphs stretching back to 2600 BC describe gold, which was considered by the ancient Egyptians to be a divine and indestructible metal, and was associated with the brilliance of the sun. Ancient Egyptians even believed the skin of their gods was golden. By 1500 BC, the immense gold-bearing regions of Nubia had made Egypt a wealthy nation, and gold became the recognised standard medium of exchange for international trade. The oldest known treasure map (which today sits in the Turin Museum) also dates back to the gold of Ancient Egypt – around 1320 BC. However, it wasn’t until 1200 BC that the Egyptians mastered the art of beating gold into leaf to extend its use, as well as joining it with other metals to create alloys, which allowed for improved hardness and colour variations. It was also around this time that Egyptians started to cast gold using the lost-wax technique, which is still at the heart of jewellery making today.
Golden Greek funerary mask c1600-c1500 BC 'The Mask of of Agamemnon' as it is known. © The Print Collector / Heritage-Images / Imagestate Enlarge >>
Greece Gold was just as central to ancient Greece as ancient Egypt, but in a way that seems more familiar to us today – as a primarily financial commodity. By 550 BC, the Greeks had started mining for gold throughout the Mediterranean and Middle East regions, and for a long time thought it was made from a particularly dense combination of water and sunlight. In 344 BC, Alexander the Great crossed the Hellespont with 40,000 men, beginning one of the most extraordinary campaigns in military history. Included in the spoils of war were vast quantities of gold from the Persian Empire. It wouldn’t be the last time that gold would be at the centre of bloody international conflicts. According to Greek mythology, Agamemnon was king of Mycenae and the leader of the Greek expedition to Troy. He is believed to have lived around 1550 BC. This gold funerary mask, excavated at Mycenae by the German archaeologist Heinrich Schliemann in 1876, is reputed to be his. By 325 BC, the Greeks had mined in areas from Gibraltar to Asia Minor and Egypt, and would soon begin to practice alchemy – the quest to turn base metals into gold. Considering that gold is an element, the alchemists were of course never successful, but their efforts are clear evidence of gold’s ongoing mystique and desirability.
Ancient Greek temple pendant, c630-620 BC. The pendant reflects the wealth of Rhodes and the skill of eastern Greek goldsmiths in the 7th century BC. Located in the Louvre, Paris. © The Print Collector / Heritage-Images / Imagestate Enlarge >>
Rome The next great civilization to prize and value gold were the Romans. They, or at least their slaves and prisoners of war, mined gold extensively throughout the empire, developing the technology of mining to new levels of sophistication. For example, they would divert streams of water in order to mine hydraulically, and even pioneered 'roasting', the technique of separating gold from rock. In 202 BC, during the second Punic War with Carthage, the Romans won access to the gold mining region of Spain, allowing them to recover gold through stream gravels and hard-rock mining. But it wasn’t until 50 BC that the widely used Aureus gold coin was issued – eight years after Julius Caesar brought back enough gold from a victory in Gaul to give 200 coins to each of his soldiers, and repay all of Rome’s debts.
Gold plaques from the Oxus treasure, Achaemenid Persian, 5th-4th century BC. © The Print Collector / Heritage-Images / Imagestate Enlarge >>
Persian treasures Gold plaques from the Oxus treasure, Achaemenid Persian, 5th-4th century BC. Man wearing Median costume; he has an akinakes (short sword) of a type depicted on reliefs at the Persian centre of Persepolis and represented in the Oxus treasure by a fine gold scabbard. The hooded man is sometimes identified as a priest because he carries a bundle of sticks known as a barsom. These were originally grasses that were distributed during religious ceremonies. The Oxus treasure is the most important collection of silver and gold to have survived from the Achaemenid period. This is one of the finest examples of a group of about fifty thin gold plaques which may have been votive objects left as a pious act in a temple or shrine near the Oxus River at Takht-i Kuwad, Tadjikistan. © The Print Collector / Heritage-Images / Imagestate
The middle ages (400 – 1400 AD) Edit
Compared to earlier and later periods, the middle ages was relatively dry in terms of gold’s history, but certainly not without incident.
The Dome of the Rock - The Mosque of Omar on the Temple Mount in Jerusalem is the oldest existing Islamic monument. It was built in 685-691 on the site where Mohammed is said to have ascended to Heaven. The Temple Mount itself is sacred as is an Islamic shrine and a major landmark located on the Temple Mount in Jerusalem. The dome was refurbished in1998 using 80 kilograms of gold. © Rolf Richardson / Spectrum / Imagestate Enlarge >>
The Roman Empire fell in 476 AD, when Emperor Romulas Augustus was deposed by the Goths. In the 6th century, the Byzantine Empire resumed gold mining in central Europe and France, for the first time since the fall of the Roman Empire. In 788, Charlemagne, King of the Franks, overran the Avars and plundered their vast quantities of gold, making it possible for him to take control over much of Western Europe. With the Norman conquest in 1066, a metallic currency standard was finally re-established in Great Britain, with the introduction of a system of pounds, shillings, and pence. The pound was literally a pound of sterling silver. In the second half of the 13th century, Marco Polo wrote of his travels to the Far East, where the “gold wealth was almost unlimited.” In 1284, Venice introduced the gold Ducat, which soon became the most popular coin in the world, and remained so for over five hundred years. In the same year, Great Britain issued its first major gold coin – the Florin. But it wasn’t until 1377 that Great Britain shifted to a monetary system based on gold and silver.
Early modern (1400 – 1800 AD) Edit
Throughout the early modern period gold continued to play an important part in our cultural expression. Whether in the realm of religion, politics, education, architecture or pure entertainment, gold's glow would always impress and inspire.
Battle of the tribes, watched by Majnun, c1492. (artist unknown) Majnun watches a battle fought by men on camels with swords and circular shields. Gold background with Persian script at top left. From a richly illustrated edition of "The Story of Leyla and Majnun" by the great Persian poet Nezami . © The British Library/Heritage-Images/Imagestate Enlarge >>
The 16th century saw no decline in ruthless leaders lusting after gold. In 1511, King Ferdinand of Spain made his famous call to action: “Get gold, humanely if you can, but all hazards, get gold”, launching massive expeditions to the newly discovered lands of the Western Hemisphere. It wasn’t until nearly 200 years later, in 1700, that gold was discovered in Brazil, which by 1720 became the largest producer, responsible for nearly two-thirds of the world’s gold output. In 1700, Isaac Newton (as Master of the Mint) fixed the price of gold in Great Britain at 84 shillings, 11.5 pence per troy ounce. The Royal Commission, composed of Newton, John Locke and Lord Somers, recommended a recall of all old currency and the introduction of new a coin, with a gold to silver ratio of 16:1. The gold price established in Great Britain was to last for over 200 years. In 1744, the resurgence of gold mining in Russia began with the discovery of a quartz outcrop in Ekaterinburg. Forty years later, the first US gold coin was struck by Ephraim Brasher, a goldsmith, to be followed in 1792 by the United States being placed on a bimetallic silver-gold standard under the Coinage Act, which defined the dollar. However, it wasn’t until 1799 that the United States first discovered gold – a 17-pound nugget in Cabarrus County, North Carolina.
Modern (1800 onwards) Edit
The 19th century began, in some ways quite prophetically, with gold being discovered at Little Meadow Creek, North Carolina in 1803, sparking the first US gold rush. For the next 25 years, North Carolina supplied all the domestic gold coined for currency by the US. Mint in Philadelphia. In 1817, Britain introduced the Sovereign, a small gold coin valued at one pound sterling.
Statue of Jeanne D Arc at the Place des Pyramides, Paris by Emmanuel Frémiet (1874); golden horse and gold amazone representing the medieval french heroine ©Bildagentur RM/TIPS/Imagestate Enlarge >>
Perhaps the century’s pivotal ‘gold moment’ came in 1848, when John Marshall found flakes of gold while building a sawmill for John Sutter near Sacramento, California, triggering the California Gold Rush and hastening the settlement of the American West. But the effects weren’t confined to the United States; in 1850 Edward Hammond Hargraves, returning to Australia from California, predicted he would find gold in his home country within a week. And he did, in New South Wales. 1868 saw the next major discovery, in South Africa, where George Harrison uncovered gold while digging up stones to build a house. Since then, South Africa has been the source of nearly 40% of all gold ever extracted from the earth. In 1900, the Gold Standard Act placed the United States officially on the gold standard, committing the country to maintain a fixed exchange rate in relation to other countries on the gold standard. This lasted until 1919, when World War I forced both the USA and Britain to suspend it. But the early 20th century also saw new discoveries and developments in finding out about the versatility of gold. The father of modern psychology, Sigmund Freud, even speculated about our obsession with gold, which he of course put down to ‘the erotic fantasies of early childhood’! In 1927, an extensive medical study conducted in France proved gold could be valuable in the treatment of rheumatoid arthritis. Also, AT&T used gold contacts pressed into a germanium surface, as they developed the first transistor in the 1940s. In 1965, Colonel Edward White used a gold-coated visor to protect his eyes from the sun during the first space walk on the Gemini IV mission, and gold-coated visors are still a standard safety feature for any modern astronaut. In fact, gold would continue to play an important role in space exploration. For example, the first space shuttle (launched in 1982) used gold in its liquid hydrogen fuel pump.
Astronaut Enlarge >>
As we enter the 21st century in earnest, gold is still one of the world’s most prized materials. It is now widely associated with notions of achievement; Olympic medals, Nobel prizes, Academy awards and the Palme d’Or (the Cannes Film Festival’s top prize), all rely on the positive connotations of gold. There have always been exceptions to this, from the golden calf in the Book of Exodus suggesting idolatry, to communist propaganda using gold as a symbol of bourgeois greed. And in Hollywood plots, stories of crime and greed often hinge on gold – Goldfinger, The Maltese Falcoln and Three Kings being some of the most famous examples. But by and large, gold continues its long tradition of being thought of positively throughout the world. In practice, gold remains an economic anchor (the Euro is partly backed by gold reserves), a technological tool (giant gold-coated mirrors were used to capture the most detailed images of Neptune and Uranus ever produced) and is of course never likely to lose its aesthetic appeal. So the story continues… Don’t forget to have a look at our After the gold rush page for more facts and figures about gold production in the 20th century.
After the gold rush Edit
The history of gold production can be quite clearly divided into two eras; before and after the California gold rush of 1848. Some calculations suggest that, until then, scarcely 10,000 tonnes of gold had been excavated since the beginning of time. Thus more than 90% of the world's gold has been produced since 1848. So the crucial turning point in the history of the gold mining industry came with the discovery at Sutter's Mill on the American River in January 1848, which ushered in a new age of gold. World production at this time stood at about 280 tonnes, but was dramatically boosted again in 1886 with the discovery of the huge gold reefs in the Witwatesrand Basin of South Africa. Gold had first been found in eastern Transvaal in 1873, but it was obvious from the beginning that Witwatersrand deposits were of a completely different order. South Africa ousted the United States as the world's premier producer in 1898, a position it has held almost continuously ever since.
From 1884, the first year of recorded output, South Africa has been the source of close to 40% of all the gold ever produced. The most productive year was 1970 when over 1,000 tonnes were mined, representing more than three-quarters of the western world’s output. While the South African gold mining industry was taking off, two further gold rushes occurred. In 1893 gold was found at Kalgoorlie in Western Australia, since when over 1,300 tonnes have been extracted form Kalgoorlie's ‘Golden Mile’ alone. Australian output peaked in 1903 at 119 tonnes, a level not reached again until 1988. And in 1896, alluvial deposits were found in the Yukon territories of Canada, initiating the Klondike gold rush which yielded 75 tonnes over the next three years. By the turn of the century, world production was averaging 400 tonnes annually.
Through much of the twentieth century, gold mining was declining in many countries. There was a brief revival after the rise in the price of gold in the late 1930s; in 1940 United States production was 155 tonnes, and in the following year Canadian output reached 172 tonnes – a record which stood until 1991. However, it was not until the dramatic price rise of 1980 that the industry experienced another major transformation, which saw old mines being revived and massive efforts to explore new sites. Western production almost doubled during the 1980s, rising from 962 tonnes in 1980 to around 1,744 tonnes ten years later. A new era of gold rushes occurred, with prospectors swarming to deposits in various countries including Brazil, Venezuela and the Philippines. Serra Pelada in Brazil proved to be one of the richest deposits ever found, yielding 13 tonnes in 1983 alone.
Canadian output trebled in the years following the gold price rise, from 51.6 tonnes in 1980 to a peak of 175.3 tonnes in 1991. The Canadian industry is more traditional, with underground operations rather than open pits. The most significant new discovery was the Hemlo field in northern Ontario, whose three mines produce nearly 35 tonnes annually. The potential for the development of future mines is promising, particularly low-grade epithermal deposits on the Pacific ‘rim of fire’, in the greenstone belt of South America, in the sub-Saharan Africa (especially Ghana) and in former Soviet states such as Kazakhstan and Uzbekistan. Although the industry faced major challenges in the early 1990s, with a lower gold price and tighter environmental controls, improved prices after 1993 provided new incentives. The period of rapid growth may be over, but with less South African output, worldwide production is expected to remain fairly stable.
A History of Gold and Silver Edit
Surrounding story by Ray Istre, based on the historical outline by The National Mining Association
What is it about gold that when it was first found in the area of Eastern Europe, 4000 BC., a human being decided to pick it up? Long before it had become one of the most desired materials known to practically every culture around the world, something made the first person decide to reach down with their hand and collect it. Perhaps it was the shine, color or shape. It might have been smooth or part of another mineral that had to be separated. This person could not have had any idea of the effect gold would have on humanity. They had no clue that men would work to find and purify this metal, or that they would collect large amounts of it and die to protect it as well as launch campaigns of war to get it from another group of people. They had no idea that some of the most beautiful art work ever made would be covered with this substance they now held in their hand. It was the people in the area of the Transylvanian Alps or around Mount Pangaion in Thrace who first mined it and began to use it for decorative purposes. Being a decoration, it was appreciated probably because of it's color and shine. It is so different from the plain dirt of the earth in color and texture. It is not like rocks, even the colorful ones because of it's malleability. Gold shines even when it is not wet. It is not like some other metals in that it does not rust or change appearance. It seemed to be the perfect material for decorative purposes and indeed may have inspired the idea of decoration in the first place.
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After initial uses of gold had evolved, it's decorative purpose began to have a more refined appearance. Maybe a man had the idea to create something that his wife would have liked or perhaps, his wife designed it herself and suggested it to her husband. This was not written down on the clay tablets used at the time, but rare examples of their work is found in museums around the world. A sense of highly refined adornment was apparently the reason that the middle eastern mind of the people of the Sumer civilization in Southern Iraq, circa 3000 BC., began to make jewelry. They developed a skill and sophistication of design that is still in use today. Consider the repeating designs use in their modern architecture or carpets and how the designs loop through each other. Notice how the designs have balance and elegance. Now, consider the elegance of a repeating loop of gold which creates a chain necklace. It is able to fall along the shape of a womans neckline, colar bone and chest. A solid wire of gold would not be able to do this, but the interlocking loops of gold allows the chain to move with the grace of the body and lay against the form. It also allows for movement when the body is in action. The beauty of gold against olive skin may be one reason to think that the idea came from the mind of a man, but no one knows for sure. A sense of engineering and creativity had to be part of the puzzle in Iraq. There was a basic ability that was developed which is part of the beauty. The engineering of the chain allowed for the movement of the already malleable gold. It was adding another step to the dance that kept on developing as other people began to use gold and develop their own reasons and explanations for it's being a part of creation.
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When the Kings of Egypt began to utilize gold jewelry and take it with them to their graves, a new effect came into being. They had their belief in the afterlife and all that was needed for that, but it also left a picture of their culture and beliefs preserved in their art, which was rediscovered in relatively modern times. In 2500 BC., Egyptian King Djer, of the first Egyptian Dynasty, had his gold jewelry buried with him in his tomb at Abydos, Egypt. He might have been the first, but was certainly not the last or most notable. The artifacts from the tomb of King Tut have traveled around to the worlds greatest museums. Millions of people have seen the golden treasures especially the gold canopic coffinette.
Storing gold in tombs may have seemed like the thing to do at one time, but as more value was given to gold, things changed. The graves of the Kings were plundered in the centuries after their burial, but some survived in tack, until the 1800's, when research begins by European archeologist. We don't want to call this "research" plundering, or do we? Lets say that it's not plundering in the classical sense. At least the art work is not being melted down and sold in a pawn shop. It is on display in museums around the world.
Perhaps they didn't find all the hidden rooms in the pyramids. There could be vast quantities of golden artifacts still waiting to be discovered. These rooms are still hiding from anyone who wants to gain entry. The builders made it more difficult to get to the valuable contents Who knows what is yet to be discovered in the hidden vaults of the pyramids? I'd be careful just in case the pyramids were designed to come crashing down on anyone who moves a certain stone which could be a door to the real vault.
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Around 1500 B. C. Egypt became very wealthy in gold coming from Nubia. During this time, gold was becoming the medium of exchange among the nations of the middle east. The Shekel coin had a weight of 11.3 grams which was a standard weight. It was made of two thirds gold and one third silver.
After hundreds of years trading everything from goats and beans, to knives and hardware, a standard item that was acceptable to everyone had emerged. This item was gold. It was bound to happen that one thing would be so universally accepted so as to become money. They didn't have mirrors at the time. Perhaps gold gave them a nice reflection of themselves?
No doubt, once it became the currency, it's prestige rose unlike any other material. At one time, a man might have been judged rich by the amount of land or cattle he had. Perhaps it was the amount of power he had over others. All of this was changing in a way that was obviously more organized in spite of the pitfalls that were to follow.
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After the establishment of gold as money, there must have been a haphazard way of determining the value of a piece of material that may or may not be pure gold. This inconsistency allowed the purchaser to get more goods or services while using less actual gold since one could not see inside of a rock with a vein of gold. Sometimes it must have worked in favor of the seller as well. In it's natural form, gold might be in a solid nugget. It could be a vein in quartz or rock. If other materials were still mixed with the gold, the weight of the gold could not be accurately determined. It would have to be separated from other natural materials before it could be considered pure and be given an exact monetary value.
In 1350 BC, the Babylonians began to use fire assay to establish a test to purify gold. They could pronounce a certain purity of the gold. This gave more confidence in the use of gold as currency and no doubt helped build a trust in Babylonian gold as opposed to other regions where it might still have been mixed with other materials.
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Gold has a softness that is unique among metals. It can be hammered down to very thin layers without splitting. It can then be used as a layer over wood, other metals or materials so that less gold is needed to cover the area in view. So instead of having a box of solid gold, it can be made of wood and covered with gold leaf, a very thin layer. The box will then look like solid gold.
In 1200 B.C., the Egyptians began beating gold into a thin layer. They also alloyed it with other metals some of which were harder. Mixing with other metals might change the color of the gold as well. The mixing of one metal with gold might give it more durability. Pure gold is soft and can be manipulated or scratched easily so adding other metals to give it more durability could serve a specific purpose depending on the intended use.
The Egyptians proved to be very creative and developed the lost wax method of jewelry making. This is done by carving the desired jewelry shape in wax, covering it in clay and heating it so that the wax is melted. The wax flows out of a small hole in the clay. As the wax leaves, the shape is ready for the melted gold to be poured into the mold created by the wax design. Once the gold is cooled and hardened, the clay mold is broken away from the gold jewelry formed by the lost wax.
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Also around 1200 B.C., gold dust was recovered by people living on the eastern shores of the Black Sea. This natural shape of gold deposit is very small, sometimes as small as grains of sand and has to be recovered very carefully.
How the use of sheepskin came into use is unknown. After careful observation, they noticed that gold was heavier than the sand and therefore fell deeper into the wool, than sand. It could have been that someone dropped a skin in the water, which passed over it making deposits of gold. Later, someone found the skin, picked it up and after drying, noticed that there was gold embedded in the wool.
The use of sheepskin was deployed here by slucing the sands through the wool, which after drying are shaken to dislodge the gold dust. This worked well because the weight of the gold is heavier than the sand it was found in. As the sand and gold was dropped on the sheepskin, the water passed over it while moving through the stream. This pushed the light sand away while the heavier gold had more of a tendency to settled down into the thick wool of the unshorn sheepskin. Once the wool was dried, it was shaken out to free and collect the gold dust.
The Greek Mythological story of the "Golden Fleece" incorporates this form of gold gathering. Jason and the Argonauts go out searching for the Golden Fleece of the winged ram Chyrsomallos. The purpose of obtaining the fleece was to place Jason on the throne of Iolcus in Thessaly. The story was developed during the time of Homer (eighth century B.C.).
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The Chinese have always been great in business. They are creative, ordered and very industrious. As gold spread around the world as a form of currency, the Chinese began to use small squares of gold as a legal form of money. Uniformity of the squares encouraged an equal value to be traded. This happened in the year 1091 B.C.
Coins, as we know them today, were first made in 560 B.C., in Lydia, a kingdom of Asia Minor. A determined weight of pure gold was measured. Some sort of indent or stamp was used to identify the coins, perhaps of a governmental leader or mythological character. Imagine the person who came up with the idea to put the leaders face on a coin. he must have been considered a public relations genius of his day. People no doubt traveled from long distances to see if they could catch a glimps of the person whos face was on a gold coin.
Purity was determined by fire and the coins were poured into shape. The acceptance of gold was becoming more and more institutionalized by governmental action. This made trade easier in the area of Asia Minor which was the major crossroads of civilization at the time.
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In 344 B.C., Alexander the Great was in the midst of creating one of the largest empires in human history. Spoils of war were always part of the payment for the winners. The winner of the campaign was to possess large quantities of Persian gold. This was one of the early of a very long line of wars to be fought which included gold as spoils.
Alexander was a great military leader and no doubt enjoyed the spoils of war, but he was driven by more than that. He crossed the Hellespont with 40,000 men and defeated the Persians with brilliant tactics and the use of disciplined professional soldiers. There were more battles to win and much more gold to be had before Alexander was to die in his early 30's.
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Gold was becoming more desirable. As was often the case, wars were fought with gold being a major motivation. Gold was hard to find. It was hard to purify and it was just a matter of time before it entered into the mind of man that it might be able to be manufactured in a laboratory.
Around 300 B.C., in the city of Alexandria, the mind of the Greeks and Jews could not be kept down. They must have figured that gold was manufactured by some combination of heat, metals or other combinations which found itself in nature. From this they began to practice alchemy whereby they took base metals and tried to turn it into gold.
Of course, they knew they would be wealthy beyond their wildest dreams, if they could do it. This lust for wealth did not allow them to consider that gold was valuable not just for its beauty, but for its rarity. If they could mass produce it, would it still be as valuable? Perhaps so, but even though this attempt was continued through the Dark Ages up to the Renaissance, it was never successful. God must have wanted gold to be difficult to obtain and therefore rare.
History of Gold
GOLD THROUGH THE AGES
The history of gold begins in remote antiquity. But without hard archaeological evidence to pinpoint the time and place of man's first happy encounter with the yellow metal, we can only conjecture about those persons, who at various places and at different times first came upon native gold. Experts of fossil study have observed that bits of natural gold were found in Spanish caves used by the Paleolithic Man about 40,000 B.C. Consequently, it is not surprising that historical sources cannot agree on the precise date that gold was first used. One states that gold's recorded discovery occurred circa 6000 B.C. Another mentions that the pharaohs and temple priests used the relic metal for adornment in ancient Egypt circa 3000 B.C. However, it is curious to note that the early Egyptian's medium of exchange was not gold but barley. The first use of gold as money in 700 B.C. is claimed by the citizens of the Kingdom of Lydia (western Turkey). Surely, you remember the kingdom of the famous fortune seeking King Croesus - circa 550 B.C.
MORE RECENT HISTORY
Virgil, the famous Roman poet of antiquity, aptly described man's undying lust for gold when he wrote:
"Auri Sacra Fames" (The cursed thirst for gold!)
In 1792 the U.S. Congress adopted a bimetallic standard (gold and silver) for the new nation's currency - with gold valued at $19.30 per troy ounce. This remained essentially unchanged until 1834, when the price of gold was raised to the $20.67 level which held for the next 100 years. It was not until 1934 that President Franklin Delano Roosevelt devalued the dollar by raising the price of gold to $35 per ounce.
Relative to today's world economic conditions, it is imperative to remember that F.D.R.'s stated purpose for dramatically increasing the value of gold was to boost commodity prices (especially farm products) and create more employment for the millions who were suffering the devastating effects of the Great Depression.
In December 1971 representatives of the ten most industrialized nations met in Washington D.C. It was their express purpose to take whatever measures in order to improve international economic conditions. The now famous Smithsonian Agreement accorded an immediate hike in the value of gold from $35 to $38 per ounce. President Richard Nixon hailed it as "the most significant monetary agreement in the history of the world." Unfortunately, it resulted in a measure too little and too late. International economic conditions continued to deteriorate, forcing the U.S. Government in 1973 to devalue the dollar a second time by raising the official price of gold to $42.22 per ounce. Finally, all international currencies were allowed to "float" freely against gold. By June of that year the London Gold Fixing had risen to an unprecedented $120 per ounce. Exploding demand during the following months set the stage for the creation of gold futures trading on the COMEX in January 1975.
A worldwide feeding frenzy for gold cannonballed its price to an all-time high of $850 per ounce on January 21, 1980. Obviously, speculative excess had carried too far. Since that date the price of gold has been in a downtrend for more than 13 years. Naturally, there have been periods of respite, when prices rebounded slightly. However, on balance the long-term bear market remained intact until April 23, 1993. On that date the June 1993 COMEX Gold futures contract closed at $347.50 - which, in our opinion, heralded a reversal of the 13 year downtrend, and thus the return of Virgil's echo: "Auri Sacra Fames"
L U R E, L O R E O F G O L D
GOLD is the oldest precious metal known to man. Therefore, it is a timely subject for several reasons. It is the opinion of the more objective market experts that the traditional investment vehicles of stocks and bonds are in the areas of their all-time highs and may be due for a severe correction. In fact the traditional indicators of valuation are far past the excessive readings of 1987 and worst than even 1929! In warning recognition of current market mania, Fed Chairman Alan Greenspan poignantly admonished that current market excesses display "IRRATIONAL EXUBERANCE WHICH MAY LEAD TO A FINANCIAL ASSET BUBBLE!"
Therefore, astute and prudent investors are seeking alternative investments. Their strategy is to seek risk diversification away from stocks and bonds, currently near all-time highs - in order to take positions in hard assets, which are presently near multi-year lows, and hold promise for reasonable good returns in the future.
WHY IS GOLD CONSIDERED SO PRECIOUS?
To fully appreciate why 8,000 years of experience say gold is forever, we should review why the world reveres what England's most famous economist, John Maynard Keynes, cynically called the "barbarous relic."
Why gold is "good as gold" is an intriguing question. Dr. Sigmund Freud, the founder of psychoanalysis, suggested that "our fascination with gold is related to the erotic fantasies of early childhood." However, we think that the more pragmatic ancient Egyptians were perhaps more accurate in observing that gold's value was a function of its pleasing physical characteristics and its scarcity.
There are many physical aspects of the yellow metal which are truly amazing. Gold is the most malleable (able to be hammered into very thin sheets) and ductile (able to be drawn into a fine wire) of all metals. It is so malleable that a goldsmith can hammer one ounce of gold into a thin translucent wafer covering more than 100 square feet only five millionths of an inch thick. It would be so thin that 1,000 sheets would be needed to make up the thickness of one newspaper page. Its ductility is equally amazing. One ounce of gold can be drawn into a wire 50 miles long! Furthermore, ONLY one ounce of this marvelous metal is required to plate a thread of copper 1,000 miles long. That's really stretching it, wouldn't you say?
Since time immemorial the noble metal's resplendent luster allows it to be designed into the world's most coveted and exquisite jewelry -- fit for queens or kings.
Gold is also one of the heaviest metals known. It has a specific gravity of 19.3, which means it weighs 19.3 times as much as an equal volume of water. Therefore, one cubic foot of gold weighs 1,206 pounds. More than half a ton! This probably explains why there has NEVER been any large armed robberies of gold bullion throughout history. Who the hell could carry it?!
S C A R C I T Y
More unbelievable than its physical characteristics is its scarcity. It is well documented that the world's holdings accumulated during all recorded history to the present is only about 120,000 metric tons. Understandably, it is rather difficult for the average person to relate to this measurement. Suffice it to say that the total world's hoard of the shiny metal will occupy a single cube 60 feet by 60 feet by 60 feet - which is equivalent to the approximate volume of three 12-room homes. This is indeed a small volume of matter to have influenced the toil and destiny of so many people since biblical days. In fact the total world's holdings of the rare metal could be transported by a single solitary oil tanker - that's if Lloyds of London would ever accept the insurance risk on this priceless cargo. The value of this priceless cargo would be approximately $1.4 TRILLION!
Another way to appreciate its scarcity is to compare it to the annual steel production in the United States. According to the Iron and Steel Institute in Washington D.C., the American industry poured an average of 10,500 tons of steel per hour during all of 1995! Please appreciate that's 24 hours per day and 365 days per year - indeed, a lot of steel. In sharp contrast the world's annual gold mine production increases the total holdings by only 2.0% per year. That's an average increase in the world's gold supply of a mere 2,000 tons per year - versus 10,500 tons of American steel per hour. Gold is indeed very, very rare.
THE EXTREME DIFFICULT TASK OF PREDICTING GOLD PRICES
Baron von Rothschild, creator of one of the most famous financial dynasties of modern times, was once heard to have said that: "He only knows of two men who really understand the true value of gold - an obscure clerk in the basement vault of the Banque de Paris, and one of the directors of the Bank of England. Unfortunately, they disagree!"
"He only knows of two men who really understand the true value of gold.... unfortunately, they disagree."
Baron von Rothschild
Most serious students of international finance share his sense of frustration on the subject. In fact if you were to ask five different monetary analysts to explain why the price of gold moves the way it does, you would most likely get seven distinct answers.
Accurate predictions for the future price of gold are at best an exercise in speculation. Nevertheless, one may establish reasonable and logical criteria for forecasting price expectations -- based upon fundamental, technical and intermarket analysis.