While natural gold has been found in the remains of inhabited caves dating back as far as the Palaeolithic Era around 40,000 B.C., there is some agreement that gold was first used as adornment in the temples of ancient Egypt. Interestingly, gold was not used as money at that time. Instead, the ancient Egyptians used barley as their currency.
Gold has been used for ornaments and decoration and as money for more than 5,000 years. By the 7th century B.C., gold was used as money in Lydia. Gold leaf has been used for the decoration of tombs and statues, cathedrals and temples, fine books and picture frames since Egyptian times.
Many Egyptian burial cases, including King Tutankhamun’s (1352 BC), were overlaid withbeaten gold (called gilding). Gold leaf is still often preferred for adorning the domes or ceilings of buildings (such as the Metropolitan Opera House in New York) because its resistance to corrosion means it will outlast paint by many years.
Gold was made into jewellery long before it was used as currency. The earliest gold jewellery dates from the Sumeric civilisation around 3,000 B.C.
For centuries, gold has meant wealth, prestige and power and its rarity and natural beauty have made it precious to men and women alike. Owning gold has long been a bulwark against disaster. Many times when paper money has failed, men have turned to gold as the one true source of monetary wealth.
The gold market is a 24-hour-a-day market where investors buy and sell gold. It is unique in that gold has had value as a commodity for centuries, unlike other commodities being traded. Of all the commodities traded, gold is the one that can be used as both a commodity and as money with which to buyother commodities.
In 1944, members of the International Monetary Fund met to determine the future of gold. Each member state agreed to set a par value for its own currency and agreed to keep the exchange rate for its currency within 1% of that par value. The principal reserve currency was going to be the US dollar. This meant that all the other countries' currencies were tied to the US dollar and that the US dollar was tied to gold.
One of their goals was to maintain a fairly consistent rate for gold. In order to do that, the members had to have the means to deal with fluctuations in supply and demand. That meant having enough gold to sell when the demand was high (to keep prices from going too high) and enough dollars to buy gold when the demand was low (to keep prices from dropping too far). Fortunately, the US controlled about 60% of the world's gold at that time and could create more dollars at will. Thus the gold market took its current form and people can now buy pure gold, gold bullion, gold stock, and gold coins 24 hours a day.