Why is gold considered a currency?

Under a free market system, gold is a currency. Gold has a price, and that price will fluctuate relative to other forms of exchange, such as the US dollar, the euro and the Japanese yen. Gold can be purchased and stored, and for those interested in investing in gold, a Free Gold IRA guide can provide helpful information. The first gold coins appeared in Lydia as early as the 6th century BC. C.

The ancient kingdom of Anatolia recognized other vital properties of gold as a suitable material for the manufacture of coins. It is malleable enough to be easily worked with, wear-resistant and virtually indestructible. First of all, it doesn't have to have any intrinsic value. A currency only has value because we, as a society, decide that it has value.

That's when the United States completely abandoned the gold standard and began using a national currency issued by the central government. In 1694, the Bank of England was the first public bank to issue official notes that the “bearer” could exchange for gold. Gold is also very rare. If all the gold in the world were to melt, it would fit within the confines of an Olympic swimming pool.

Finally, gold cannot be counterfeited or inflated; central banks cannot reproduce gold as they do with fiat currencies. If you put together all the earrings, all the golden rulers, the small traces of gold on each computer chip, each pre-Columbian statuette, each wedding ring and cast it, it is estimated that you would only have a 20-meter cube left or something like that. While the use of gold as an international means of valuing currencies helped to stabilize exchange rates for trade, it also restricted the ability of governments to print money at will. All of this is a quick summary of why gold has been the dominant form of money as opposed to all other elements.

However, the growing demand for paper money put the gold standard under enormous pressure during the 20th century. Gold is also portable and divisible; dividing it doesn't change its value, unlike other metals, such as diamonds. In addition to shells and alcohol, commodities used as media of exchange include barley, salt, peppercorns, tea, cacao beans, silk, silver, and gold. That's where I meet Andrea Sella, professor of chemistry at University College London, next to an exquisite shell made of pure whipped gold.

For example, many countries escaped the Great Depression in the 1930s by unhooking their coins from the gold standard. So it turns out that the reason why gold is precious is precisely because it is so chemically uninteresting.