The Historical Role Of Gold In The World’s Economy

Looking at the history of economics all over the world one will always find one word repeating itself – Gold. Gold has been the precious metal backing the entire world’s financial markets since the dawn of humanity and for a good reason. It is rare enough to be considered precious but is common enough to be available to the public. But obviously the main reason is it is just very appealing to the human eye.

Up until about a hundred years ago gold was backing almost all of the world’s currencies. for example a US Dollar was redeemable by gold. So in order for a bank to print dollars they had to have that amount in gold backing it up. This was good as the people using the currency were always secure in the sense that the piece of paper they were holding was actually worth something in gold which is a tangible precious metal. But about a hundred years ago they formed the central bank in the United States or the “Federal Reserve” (Also known as the “Fed”) that decided to change the old rules and come out with new ones. The new rule was – The dollar is backed by… nothing. In other words, we (the fed) can print out as many dollars as we want no matter how much gold we have in our safes.

This caused big changes in the rates of gold and made the dollar a less steady currency. After this change the U.S suffered from a few major financial crisis’. There was one at 1929 and a few in the past 30 years, the last one being at 2009 that is effecting us even to this day. But what happened when this crisis occurred was very interesting. Gold prices shot up about 500% in a course of a few years as can be seen in the gold price per once @ GBR. The gold prices now fluctuate between $1500 and $2000 per ounce and it seems that the prices can even go higher. If there will be another financial crisis in the near future we might see the gold prices going even higher than $5000 per ounce which will make everyone’s life very miserable.

There is a growing movement of people buying actual gold instead of investing their money in the stock markets and only time will tell if their investment was a wise decision…