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A History of Gold Investment

Gold Investment: A Brief History

Gold is perhaps the most popular commodity of all history. Since it was used in early civilizations as a form of status and to honour the gods to being used as currency, gold has been a constant shadow of the evolution of human cultures from the ancient to the modern world.

Gold has been highly valued for its unique and attractive properties since as far back as 4000 BC. The oldest gold treasure in the world dates from 4,600 BC to 4,200 BC and was discovered at a Bulgarian burial site in Varna.

There is no culture or era where gold cannot be seen to have a high value. From ancient Egypt to the Aztecs, China’s many dynasties and the Grecian and Roman treasure hoards gold is synonymous with power and wealth. Both a form of currency as well as a standard of wealth, gold was the basis upon which the global economy as we know it stands today. Without golInsider's Guide to gold and silverd, a monetary standard would not have been possible and the prosperity of trade that depended upon it.

Gold usage as a tool for bartering and trading

Throughout history, gold has often been used as a tool for bartering or trading. It was first used as a form of currency back in 500 BC, when Darius the Great, ruler of the Persian Empire, minted the very first gold coin, known as the “daric,” in order to help fund the expansion of his army into foreign territories. Up until the last century, many countries around the world used gold and silver coins as a form of currency. It wasn’t until the 1930s during the worldwide depression, that countries ceased to use the gold standard.

gold investment roman coins
Gold has been a part of our economy since the Ancient World. Examples of Roman Currency via Wikimedia.

Gold and the Dollar….

The United States Congress passed the Mint and Coinage Act in 1792. This act put in place a fixed price of gold with parity to the US Dollar. The act had a far-reaching impact on the modern history of gold as a precious metal. As per the new legislation, gold and silver coins were considered legal tender in the US. Gold, which is today 75 times the price of silver, was only 15 times dearer than silver at the time. The US mint therefore bought and sold silver and gold at a ratio of 15:1. However, the coming of the American Civil War changed that ratio.  Since the US was unable to meet its debts using gold and silver, paper currency was introduced for the first time in the US in1862. The paper currency was known as a fiat currency, or one which is not convertible on-demand at the existing fixed rate.

Eventually, in 1873, silver was removed altogether from the US mint’s fixed rate system and a bill called the Coinage Act of 1873 was passed to officialise the removal of silver dollars from the US monetary system.

physical gold investment
Gold is more than a word – what does it say to you?

The 1800s witnessed a spate of gold rushes, as speculative adventurers rushed off to uninhabitable areas in search of the precious metal, in the hope of becoming millionaires if they struck gold. The notable gold rushes across North America at the time were North Carolina in 1799, San Francisco in 1848 and Klondike in Canada, 1896. Australia too witnessed a number of gold rushes in the latter half of the 19th century from 1850. Infact, the gold rushes helped populate areas of the great Australian outback, which had not been occupied by humans earlier. Today, these places are burgeoning cities and they owe their existence to the coming of the speculators in the 1800s.

The Bretton Woods Agreement

Another important point in the modern history of gold is the Bretton Woods agreement. The two world wars had devastated the international financial markets and at the end of World War II, the global leaders came together to create a gold exchange standard for the world, linking it to the US Dollar. At the end of the war, the US emerged as the strongest nation, both militarily as well as economically. So, the US Dollar was chosen under the Bretton Woods agreement and this made the US extremely powerful on the international markets. The move is one of the most important points for the price of gold and for the US economy, as it paved the way for the US to become a global superpower.

As a commodity and a currency, the history of gold investment is a complex one and is relatively modern. Whilst accumulating wealth (and investing) is not a new human proclivity, the mechanisms for a standard benchmark of gold pricing relative to paper currency only emerged in the last few centuries. Europe was the first continent to implement gold standards at the end of the 19th century with the US following suit after WWII. All nations have since adopted a fiat currency system though most hold gold as central reserve or as commodity money.

After the Second World War

After the second world war, the US dollar became the main currency to hold by other governments as it was the only currency still backed by gold. This continued up until 1973 when America became the last country to cease using the gold standard. The reason for this was that the country required additional funds to pay for the Vietnam war.

History of Gold Investment
Daric Gold Coin

Gold as an investment

Gold purchased as an investment really only took off after the 1970’s when The United States once again made it legal to own and trade in physical gold. Up until 1975, the Gold Reserve Act Of 1934 had made the possession of gold illegal.

Gold is a popular investment among a diverse range of investors who wish to diversify their portfolio outside of traditional stocks and shares and in doing so reduce their risk. Over a long period of time gold has consistently held its value against other asset classes and in the last 45 years has been shown to have outperformed stocks and shares.

What’s the deal today?

Today gold is typically purchased as a hedge against inflation and its price has often been known to rise during times of economic crisis. The main reason for this is that during times of economic uncertainty, people often turn to tangible assets in which to store their wealth in case of a market crash. A great example of this occurred after the 2009 financial crisis when the price of gold rose to its highest peak in history.

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Due to ever-increasing geopolitical tensions and a growing mistrust of the current financial system, the popularity of gold investments has grown significantly in the past two decades. As Britain moves towards an uncertain future outside of the European Union, it is likely that investor demand for physical gold will continue to increase.

Introduction of the Krugerrand

The South African Krugerrand, launched in 1967, was the very first coin designed specifically for investment purposes. At the time South Africa was the biggest gold producer in the world and the Krugerrand was the perfect way to capitalize on this. For the very first time, it offered investors a vehicle for the private ownership of gold and at one time the Krugerrand accounted for nearly 90% of the global gold coin market. Since its inception, many other countries have introduced their own version of the Krugerrand including Britain’s very own Britannia coin.

History of Gold Investment
1 oz Gold Krugerrand

Influence of the World Gold Council

The World Gold Council has been instrumental in changing the way people perceive gold as both an investment and a commodity. Founded in 1878, the WGC has helped to promote demand for gold all over the world. Today the WGC continues to have considerable influence on the gold investment market and launched the very first gold ETF in 2004.  For more information on the World Gold Council, you can read our article on them here.
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Popular forms of Gold Investment

Gold is one of the most versatile assets available on the market and there are many different types of gold investments. Some of the most popular of which include:

Collectors’ Coins

Collector’s coins are popular with a wide variety of investors as they offer numismatic value as well as just their material value. If you have access to expert advice, or even if you have sufficient knowledge in this area yourself, then historic collectors’ coins can provide excellent returns.

Gold Bullion Coins

Gold bullion coins are usually issued by countries or commercial businesses. Popular examples include the Britannia, the Sovereign, the South African Krugerrand and the American gold eagle. These coins are generally for investment purposes only and are priced based on the weight and purity of the gold content that’s been used.

Gold Bullion Bars

Gold bars are one of the easiest ways to invest in solid gold.

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You can buy them in weights of one gram, one ounce, ten ounces, and one kilo. They typically have a purity rating of 999.9.

Gold ETF’s

Gold ETFs have been around for less than 15 years, however, since the launch of the very first gold ETF back in 2004 they have become one of the most popular forms of gold investment, allowing investors to profit from changes in the price of gold without having to own any physical gold themselves.

Gold Mining Company Stocks

Some of the hottest stocks right now are issued by gold mining and exploration companies. Part-ownership in these companies is becoming an increasingly common investment.

Gold investment through Physical Gold

Physical Gold offers a wide range of gold based investments including vat free gold bars (such as 100g, 1oz and 1 kilo), tax-free coins and much much more. To speak to one of our experienced brokers or to find out more information on any of our product ranges please contact us on 020 7060 9992.

Image sources: Flickr & Wikipedia

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Common Customer Questions About Gold Investment and our Expert Answers

Gold Investment FAQs

We are frequently asked many questions about investing in gold. As a guide to customers and for clarity, we have listed many of these questions in this article, which we hope you enjoy reading!

1)    Are gold coins a good investment?

We have written a detailed answer to this question, simply read our answer at this blog post.

Gold Lunar Pig

2)    Is gold ETF a good investment?

Read our detailed answer at https://www.physicalgold.com/insights/is-a-gold-etf-a-good-investment, we also recommend reading buying a gold ETF.

3)    Which is the better investment, gold or silver?

See https://www.physicalgold.com/insights/which-is-the-better-investment-gold-or-silver for a comprehensive answer to this question.

4)    Best gold investment for beginners?

The best gold investment for beginners is to focus on the well-established UK bullion coins such as Sovereigns and Britannias. Premiums are low on these coins and it’s difficult to go wrong as they’re so easy to sell at excellent prices. Avoid buying proof coins or boxed collectors coins which will cost far more.

5)    Is gold a good investment?

Please read our detailed to answer to this question at this link.

Gold bars, in particular, are usually classed as a long-term investment
Gold bars, in particular, are usually classed as a long-term investment

6)    How does gold investment work?

The idea behind gold investment is that the underlying value of gold increases over time. Historically this rate of increase is higher than inflation, so the value of your investment increases in real terms. Investing in gold can take the form of physical bars and coins, gold equity funds, mining shares or ETFs.

7)    Gold investment vs Bitcoin?

For our dedicated article on this topic, please read https://www.physicalgold.com/insights/gold-investment-vs-bitcoin/.

8)    Best gold investment UK?

The best UK gold investment is to buy Sovereigns and Britannia coins. Physical ownership means you have no counterparty risk. The bullion coins represent great value compared to proof coins or collector’s coins, and both benefit from a strong second-hand market, so they’re easy to sell. As UK legal tender profits from selling these coins are also free from Capital Gains Tax.

Britannia gold coins are a solid investment buy
Britannia gold coins are a solid investment buy

9)    Where to buy gold for investment?

Click https://www.physicalgold.com/insights/where-to-buy-gold-for-investment to read this article, which answers the question.

10) Gold investment vs stocks?

10 commandments
Click https://www.physicalgold.com/insights/gold-investment-vs-stocks for an answer to this question.

 

 

11) Gold coins vs bars?

Visit https://www.physicalgold.com/insights/gold-coins-vs-bars for a comprehensive answer to this article.

Why not also view our video, “Gold coins – collecting as a hobby and for-profit”?

12) Gold investment for 2018?

2018 is a good year to start off in gold investment as gold prices are significantly lower than at the height of the market. Gains may not be straight away, but 2018 is a prudent starting point with Brexit still looming, equity markets due to a large price correction, and credit bubbles brewing in the background. The gold price would likely increase in any of these events.

13) How safe is gold investing?

Click how safe is gold investing to read our detailed answer to this question.

14) Gold investment vs fixed deposit?

Read https://www.physicalgold.com/insights/gold-investment-vs-fixed-deposits in our detailed FAQ answer blog article.

15) How good is gold investment right now?

As of March 2018, the gold price was around 20% off its all-time high, and around 13% off its high from the past 12 months. This provides a great buying opportunity to buy more gold for the same money. Many experts predict a significant stock market correction any times in the next 18 months which would propel the gold price upwards.

Insider's Guide to gold and silver

16) Which is a better investment, gold or diamonds?

Please read our detailed answer to this question by clicking this link – https://www.physicalgold.com/insights/which-is-a-better-investment-gold-or-diamonds/.

17) How to do gold investing?

If you’re wondering how to buy gold investment, then the simplest and safest way is to buy online from a reputable dealer. Research into the broker first and ensure they have a track record. They may be able to offer you guidance as to which coins and bars to buy. For example, gold bars are available in various sizes such 1oz, 100g and 1 kilo and you may need dealer advice as to which is the best to buy for your circumstances. You can either receive the gold yourself or have the dealer store it for you. When the price has risen over time, sell the gold at a profit.

18) Which gold is best for investment?

Please read our detailed answer to this question here.

19) How to buy gold investment coins?

We have written a detailed answer to this question which can be read at https://www.physicalgold.com/insights/how-to-buy-gold-investment-coins.

Gold investment coins include foreign coins such as the Krugerrand

Gold investment coins include foreign coins such as the Krugerrand

20) Where to buy gold bars for investment?

Visit https://www.physicalgold.com/insights/where-to-buy-gold-bars-for-investment, which answers this question in detail.


Why not also view our video, “Buying gold bars – a guide for investors”?

21) What is gold investment?

We have written a detailed answer to this question. This can be accessed by clicking here.

22) What is ETF gold investing?

Buying gold ETFs is an important topic to understand. Read our answer to this question at https://www.physicalgold.com/insights/is-a-gold-etf-a-good-investment.

23) Gold investment vs property?

Click https://www.physicalgold.com/insights/gold-investment-vs-property for our answer to this question.

24) What is paper gold investment?

Read https://www.physicalgold.com/insights/what-is-paper-gold-investment for more detail on this topic and an answer to the question.

25) Gold investment and risk?

Click https://www.physicalgold.com/insights/what-risks-are-involved-in-gold-investment for a detailed answer about gold and risk.

26) Gold investment for dummies

Visit https://www.physicalgold.com/insights/gold-investment-for-dummies for a detailed answer to this question.Why not choose our Directors Pick for great value gold investments?

Why not choose our Directors Pick for great value gold investments?

27) Which is the better investment, gold or platinum?

Visit https://www.physicalgold.com/insights/which-is-the-better-investment-gold-or-platinum for a comprehensive answer.

28) Which gold coins are a good investment?

We have created a detailed answer to this question. Please visit https://www.physicalgold.com/insights/which-gold-coins-are-a-good-investment/ to read our detailed answer.

29) Should investments in gold be for the long term?

We have created a detailed answer to this question, simply visit https://www.physicalgold.com/insights/should-investments-in-gold-be-for-the-long-term/ to read this.

 

Contact Physical Gold today

Why not contact Physical Gold today to discuss investment approaches to gold and also with any more questions! We are here to serve and can be contacted at 020 7060 9992, also view our contact details here.

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World’s Fair of Money, Donald E. Stephens Convention Center, Rosemont, IL — August 13-17, 2019

World Money Fair 2019

An integral part of life as a numismatist is to research and view important coin collections from around the world. This is probably as important as setting up one’s own collection. This year, numismatists from around the world will be flocking to Rosemont, Illinois to attend the World’s Fair of Money, an important global event organised by the American Numismatic Association (ANA).

What is the event all about?

The event is a 5-day exposition which will be held from 13th to 17th August 2019 at the Donald E. Stephens Convention Center, located in Rosemont, Illinois. The centre is strategically located for all visitors and has convenient transport links from all over. The convention centre has 6 halls and 840,000+ square foot of space for exhibitions.

The event will not only showcase rare coins and currency bank notes but also stamps, postcards and other items of antique and philatelic importance.


Find out how to sell your gold coins at the highest possible price. Download FREE our 10-rule guide here


Registration and timings

If you are a keen numismatist and are interested in PHYS01_Animated_Gif_2_MPUattending this event, online registration is available for ANA members only. Non-ANA members can register at the show.

The fair is open to visitors from 1 pm on Tuesday, 13th August. From Wednesday 14th to Friday 16th August, the show will open at 10 am. The event will close at 6 pm on all days, barring the last, when it will close at 4 pm. Members of the ANA will enjoy free entry and special entry timings that allow them to enter the event half an hour earlier than the general public. The admission price is $8 per adult non-member, with the exception of Saturday, which is free to all visitors. Kids below 12 go free to the event on all days. Admission to the event will close 30 minutes before the official closing time.

World's Fair of Money 2019
The World’s Fair of Money is being staged in Illinois in 2019

Exhibitors from all over the world

Important numismatic entities will participate in the event. Coin grading experts like PCGSANACS and NGC will have their stalls up at the event. PCGS will start accepting submissions for on-site grading of coins on 13th August and have advised attendees to the exhibition to check with a PCGS representative at their booth for the exact timings for acceptance of submissions.

About the 2018 World’s Fair of Money event

The 2018 World’s Fair of Money was held at the Pennsylvania Convention Centre, located in Philadelphia and was staged from 14th to 18th August, 2018.  The event had 483 bourse tables, which represented 405 companies and 1,373 dealers/support staff. The official auctions were very active and raised over $81million. In total, the event had nearly 10,000 visitors and was attributed as a great success.

About the 2017 World’s Fair of Money event

The 2017 World’s Fair of Money was held at the Colorado Convention Centre in Denver, Colorado in August 2017. The event had 500 bourse tables, which included a special sale by the US Mint that attracted considerable public interest. There were two auctions held at the 2017 event by renowned auctioneers – Heritage Auctions and Stacks-Bowers. The two auctions generated several million in sales. Interestingly, prior to the 2017 World’s Fair of Money, the previous one was held 11 years ago in 2006.

Talk to the numismatist team at Physical Gold

If you’re a keen numismatist and want to know more about buying rare coins, look no further. Our team of numismatic experts can guide you on where and how to invest in valuable coins. Call us on 020 7060 9992 or email our numismatic team to find out more.

 

Image Credit: World’s Fair of Money