What is gold, and why is it so important? Is it still the basis that our modern monetary system rests on? First, a little history...
Gold is thought to be one of the first known metals. The word "gold" came from an old English word geolo, meaning yellow. The ancient Egyptians were very proficient goldsmiths -- hammering gold into leaf so thin that it took 367,000 leaves to make a one inch pile. Gold has been a valuable metal throughout the ages because it is scarce. It is a beautiful metal that has a lovely yellow color and a soft metallic glow. It is soft and easy to work with. It can be drawn into a fine wire, and as the Egyptians discovered, hammered into thin leaf. It is very malleable and can be easily shaped into various forms. It is highly resistant to rust and is corrosion-resistant.
Because of gold's versatility, it can be used in many applications. One of its primary uses is as jewelry and adornment. In Mesopotamia (now Iraq) gold cups and jewelry have been excavated that date back to 3500 B.C. In the Egyptian tombs, jewelry and masks made of gold have been discovered. During the Middle Ages a science called "alchemy" evolved as a way to try to artificially create gold.
Worldwide, the gold rush led to the development of frontiers. The largest U.S. gold strike occurred in the 1900's near Carlin, Nevada. In 1965 an open-pit mine began operating there and the Carlin mine added about 10 percent to the annual gold production of the U.S. United States wasn't the only country to have gold rushes. In 1851 gold was discovered in Australia and that rush saw the population of Australia triple in the following nine years. New Zealand experienced a gold rush in 1861 and their population also grew tremendously. Johannesburg in South Africa was founded as a result of the 1886 gold rush. Canada's Yukon Territory was developed as result of a gold rush that started in 1897. It appears that gold rushes played an important part in developing territories in many parts of the world.
Gold (AU is the chemical symbol) is also used today in many electrical components. But it's most well-known use as money -- as a medium of exchange. Money used to actually be made out of gold. Gold coins were traded for goods and services. In today's market, what place does gold maintain?
The phrase "gold standard" is defined as the use of gold as the standard value for the money of a country. If a country will redeem any of its money in gold it is said to be using the gold standard. The U.S. and many other Western countries adhered to the gold standard during the early 1900's. Today, however, gold's role in the worldwide monetary system is negligible. Britain abandoned the gold standard 1931; the USA abandoned it 1971. Holdings of gold are still retained because it is an internationally recognized commodity, which cannot be legislated upon or manipulated by interested countries. On August 15, 1971, the world entered the first era in its history in which no circulating paper anywhere was redeemable in gold, by anyone. At one point in time it was illegal for a U.S. citizen to own gold. President Richard Nixon of U.S. closed the "gold window." This action broke the last tie between gold and circulating currency, resulting in our modern financial system which is called a "floating currency" system.
Since 1976 gold the U.S. government no longer sets the gold value of a dollar. The price of gold rises and falls in relation to the demand for the metal. Gold coins have not been minted as legal currency since 1933. In 1986 the U.S. Mint did begin to issue gold coins for collectors four denominations: $50, $20, $10, and $5. And there really is a Fort Knox! Since 1937 most of the nation's gold has been stored there, underground.
Even though the world's monetary systems are no longer based on the value of gold, people are still intrigued and impressed with it. It is a valuable metal with many high-tech uses, and a beautiful metal that still adorns the artifacts of kings.