How is gold turned into money?

Gold has always played an important role in the international monetary system. Gold coins were first minted by order of King Croesus of Lydia (an area that is now part of Turkey), around 550 BC. C. For those looking to invest in gold, a Free Gold IRA guide can provide invaluable information on how to get started. Technically, gold is money when it is a currency because a gold coin has a nominal legal tender value.

However, it would be almost impossible for you to spend that currency at the supermarket; the same goes for other forms of gold. These coins began to be created from gold and other metals, causing the values of real currencies to fluctuate over time. The process of converting physical gold into money began when goldsmiths, who used to store gold for other members of society in exchange for a fee, began issuing receipts for storage. To understand why the gold situation in the economy reached this point, let's go back in time to the time when bankers saw an opportunity to replace metal with paper money.

By the 17th century, gold production had advanced and royal mints stored the gold reserves that merchants had acquired. Therefore, these documents are a valuable resource for researchers seeking an even deeper knowledge of the history of money and gold. The main purpose of such a bank was to lend money to monarchs, but it also served as protection for bankers who issued more money than they could exchange for gold. Since the physical quantity of gold acts as a limit to that emission, a society can follow a simple rule to avoid the evils of inflation.

Roman society had de facto used coins as a medium of exchange for up to 100 years before the Republic officially introduced gold money in 300 BC. C., which led to the minting of the famous Aureus 250 years later. Having greater control over the purity of the metal paved the way for accurate evaluations of gold and was a key step forward in the transition from gold as a show of value to easily divisible means of exchange that represented economic influence. Their gold reserves fell steadily as money flowed to war-torn nations and their own high demand for imports.

It covers the period from the establishment of the United Kingdom's gold standard in the early 19th century to the re-establishment of the gold standard after the First World War. Gold coins continued to be integrated into European culture and, after the fall of Rome, the Byzantine Empire continued the tradition until the Middle Ages. Report entitled “The suspension of the gold standard in Great Britain and its effect on European countries”. Report of the House of Commons Committee issued in response to the previous month's request by working goldsmiths in London regarding the export of large quantities of silver from England to France and the excessive burden this placed on working goldsmiths.