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13 August 2013

Gold Was Used To Restore Value To The Financial System

By Roger Costain


Thanks to modern computing and the world wide web, everyone can now own a gold ingot or two (or three). Just find yourself a broker that you trust and think about how much you wish to purchase. It's just become so simple nowadays, and it's even become something of a hobby among people on the internet.

With all our new industrial technology and metal extraction techniques, there are still people around the world who mine gold in a similar way to our ancestors. One huge change in society today is that if you work hard and save your money, you can buy and trade gold to your heart's content. This was not possible in earlier times. We've taken our technological advantages and applied them to the collection, dissemination and analysis of data to create a vastly more educated and wealthier middle class.

Along with property, owning your very own stockpile of gold has always been seen as a measure of wealth in societies throughout the world. Gold has has its ups and downs in terms of price, but in general it is a steady riser and over longer periods of time, measured in say decades, it always appreciates in value at a similar rate to the share market. If the rest of market looks like it's going to be in for a rough ride, the price of gold goes up as more people buy it as a "safe haven". Making money from gold seems like a good idea, when other investments are on such a rollercoaster at the moment.

What is it about gold that makes it so special? Like all precious metals, gold has a range of factors that make it both hard to use (it has a high melting point) and easy to use (it is very soft). In early times, gold was associated with water, and the ancient Greeks believed it may be a unique (and poetic) combination of water and sunlight. As time went on, and as people began bartering for goods and materials, gold and silver suddenly became useful as money. Ancient cultures used gold and silver as portable and private money - that is, in the form of "coins". It is interesting to think that the majority of the world's gold has been re-used. In fact figures show that one third of the gold on the market today has been re-used.

Since the mid-1940's gold is no longer the generally accepted standard upon which currencies are based, a system of floated and traded currencies are now the norm. These types of currencies are susceptible to high levels of inflation and external debt and many have failed just within the last hundred years which then resulted in their citizens bartering or exchanging gold personally to establish real value of assets. Even the mighty Roman Empire had its fiat currency fail during the height of its power. In every case, gold was used to restore value to the financial system that had failed.




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