The Capital Gold Group - The History of Gold
The Capital Gold Group - The History of Gold
Since early civilizations, gold has been the ultimate symbol of beauty, wealth, immortality, and power in many cultures throughout the world. Even before it was used as money, people placed great value on gold. The rulers and elite of the world turned it into objects of worship and created shrines, idols, vessels of all types, and jewelry.
Today, as in ancient times, the intrinsic value of gold has the same universal appeal. Gold’s beauty, scarcity, unique density, and the ease by which it could be melted, formed, and measured made it a natural trading medium. Gold gave rise to the concept of money itself: portable, private, and permanent. Gold (and silver) in standardized coins eventually replaced barter arrangements, and gold was first used as money around 560 B.C.
The United States began to use coins for commerce in the early 1800’s, which remained in circulation until 1933, when they were banned from being used as legal tender as an attempt to remedy
the perceived causes of the Great Depression. In Executive Order 6012 signed on April 5, 1933, President Franklin D. Roosevelt prohibited the “hoarding” of gold and limited any person from
owning more than five ounces. The government required holders of significant quantities of gold to sell their gold at the prevailing price of $20.67 per ounce. Shortly after this forced sale, the price
of gold from the treasury for international transactions was raised to $35 an ounce. The U.S. government thereby devalued the dollars (which it had just forced citizens to accept in exchange for
their gold) by 41% of its former value.
The confiscated coins and bullion were melted into bars and sent overseas to pay foreign debts, and it is estimated that only 1% of the coins in existence at that time survived the massive meltdown.
The government held the $35 per ounce price until August 15, 1971, when President Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed value, thus abandoning the gold standard. The limitation on gold ownership in the U.S. was repealed after
President Gerald Ford signed a bill legalizing private ownership of gold coins, bars and certificates by an act of Congress which went into effect December 31, 1974.
The wait was finally over. Demand in the 1970’s paved the way to the current gold market, as fewer pre-1933 gold coins were available but investor demand began to surge. Since then, U.S. gold coins have dominated the world gold market. Their popularity is a result of the scarcity of these gold coins, and the potential return on investment they offer investors.
Bullion, the most widely traded type of gold, is commonly found in the form of coins. It is favored because of its affordability. The most popular bullion coins include the American Eagle, the Canadian
Maple Leaf, and the South African Krugerrand. In the 1980’s, with greater and greater numbers of investors entering the coin market, industry leaders recognized the need for an extremely reliable form of protection for rare coin consumers.
Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC), the nation’s leading reputable third party grading services, were formed, bringing standardized coin
grading and guaranteed authenticity to the industry, creating a climate in which investors could participate in the coin market with greater confidence.
Today, investors recognize gold not only as a means for capital appreciation, but also as a way to secure their long term savings and retirement goals, and to diversify their portfolios away from strictly dollar-denominated assets in these uncertain economic times.
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