Story of Gold
The story of gold is as rich and complex as the metal itself.
Wars have been fought for it; love has been declared with it. Ancient Egyptian hieroglyphs portray gold as the brilliance of the sun; modern astronomers use mirrors coated with gold to capture images of the heavens.
By 325 BC the Greeks had mined for gold from Gibraltar to Asia Minor. In 1848 AD John Marshall found flakes of gold whilst building a sawmill near Sacramento and so triggered the gold rush in California.
Held securely in national vaults as a reserve asset, gold has an irrefutable logic; released from the tombs of pharaohs and emperors alike, gold has an undeniable magic.
In Heritage we describe just some of the key moments from gold’s history. Further sections take time to discuss important fundamental issues such as the relationship of demand and supply, gold’s price history; the golden constant and gold’s contribution to society.
Numbers and facts draws together some of the more extraordinary statistics which gold has accumulated across the centuries and around the world.
Heritage
Click on the images to enlarge
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c. 3600 BC
First smelting of gold
Egyptian goldsmiths carry out the first melting or fusing of ores in order to separate the metals inside. They use blowpipes made from fire-resistant clay to heat the smelting furnace. -
2600 BC
Early gold jewellery
Goldsmiths of ancient Mesopotamia (modern-day Iraq) craft one of the earliest pieces of gold jewellery, a burial headdress of lapis and carnelian beads with willow leaf-shaped gold pendants.
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1200-1500 BC
Advances in jewellery making
Artisans develop the lost-wax jewellery casting technique. The process allows for improved hardness and colour variation which in turn broadens the market for gold products. -
1223 BC
Creation of Tutankhamun's funeral mask
Instantly recognised the world over, the funeral mask of Tutankhamun is a triumph of gold craftsmanship from the ancient world. -
950 BC
Solomon builds gold temple
The Queen of Sheba from Yemen presents King Solomon of Israel with 2,500 kilos of gold, bringing the contents of his treasury to 5,700 kilos. Solomon uses part of his holdings to construct his famed temple, allegedly overlaid with gold.
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600 BC
First gold dentistry practiced
The first use of gold in dentistry as the Etruscans begin securing substitute teeth with gold wire. Bio-compatibility, malleability and corrosion resistance still make gold valuable in dental applications. -
564 BC
First international gold currency created
King Croesus develops improved gold refining techniques, permitting him to mint the world's first standardised gold currency. Their uniform gold content allows 'Croesids' to become universally recognised and traded with confidence. -
300
First gold nanoparticles
The Romans use gold to colour the Lycurgus Cup. Melting gold powder into glass diffuses gold nanoparticles throughout which then refract light, giving the glass a luminous red glow.
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1300
Hallmarking practice established
The world's first hallmarking system, scrutinising and guaranteeing the quality of precious metal, is established at Goldsmith's Hall in London - where London's Assay Office is still located today.
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1370
The Great Bullion Famine begins
During the years 1370-1420, various major mines around Europe become completely exhausted. Mining and production of gold declines sharply throughout the region in a period known as 'The Great Bullion Famine'. -
1422
Venice's record year
The Venice Mint strikes a record 1.2 million gold ducats using 4.26 metric tonnes of gold from Africa and Central Asia. These small coins prove popular as they are easy to mint and carry plenty of value.
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1511
Ferdinand unleashes invasion force
King Ferdinand of Spain proclaims "Get gold, humanely if you can, but at all hazards, get gold!", launching unprecedented expeditions to the Americas. Within years, the Inca and Aztec civilisations would be virtually destroyed by Spanish conquerors. -
1717
UK gold standard commences
Britain moves onto a de facto pure gold standard, as the government links the currency to gold at a fixed rate (establishing a mint price of 77 shillings, ten and a half pennies per ounce of gold). -
1803
First gold electroplating practiced
The first recorded experiment in electroplating is carried out by Professor Luigi Brugnatelli at the University of Pavia. Gold electroplating ensures improved conductivity, now essential to many 21st century technologies.
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1848
California Gold Rush begins
John Marshall discovers gold flakes while building a sawmill near Sacramento, California. The greatest gold rush of all time follows as 40,000 diggers flock to California from around the World. -
1885
South African Gold Rush begins
While digging up stones to build a house, Australian miner George Harrison finds gold ore on Langlaagte farm near Johannesburg. Miners flock to the region. South Africa will go on to become the source of 40% of the world's gold.
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1885
First Faberge Easter egg crafted
Carl Faberge makes his first gold Imperial Easter Egg for Tsar Alexander III. Named The Hen Egg, it was commissioned as a gift from the Tsar to his wife, the Empress Maria Fedorovna, beginning a tradition that lasts until 1917.
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1870-1900
Adoption of gold standard
All major countries other than China switch to the gold standard, linking their currencies to gold. The practice of bimetallism is abandoned. -
1925
Gold standard returns
The UK returns to the gold standard at pre-war parity of $4.86=£1 with sterling convertible to gold at 77sh 10.5d per standard ounce. This follows the country's departure from the gold standard six years previously at the outbreak of World War I. -
1933
Roosevelt suspends gold
President Roosevelt suspends US dollar convertibility to gold (gold at US$20.67/oz). The export of all transactions in, and the holding of gold by private individuals, is forbidden. Presidential proclamation makes the dollar convertible again in January 1934 at a new price of $35 per troy ounce. -
1939
World War II closes gold market
The London gold market is closed on the outbreak of war, as at the beginning of World War II. The world will later return to a fixed system of exchange rates, this time with currencies fixed to the dollar and the dollar convertible into gold. -
1944
Bretton Woods conference
The Bretton Woods conference sets the basis of the post-war monetary system. The US dollar is set to maintain a $35=1 oz gold conversion rate. Other currencies are fixed in terms of US dollar, thus forming a Gold Exchange Standard. -
1961
First gold bonded microchips
Gold bonding wire is used in microchips engineered at Bell Labs in the USA. Nowadays literally billions of chips are bonded this way every year, controlling all manner of indispensible electrical devices. -
1961
First gold in space
The first manned space flight uses gold to protect sensitive instruments from radiation. In 1980, 41kgs of gold is included in space shuttle construction through brazing alloys, fuel cell fabrication and electrical contacts. -
1967
First South African Krugerrand
The Krugerrand is introduced in 1967, as a vehicle for private ownership of gold. This iconic coin is actually intended for circulation as currency. -
1971
Gold window closed
The Bretton Woods system of fixed exchange rates comes to an end as President Nixon "closes the gold window", suspending US dollar convertibility to gold. The world enters its present day system of floating exchange rates. -
1985
First gold-based arthritis treatment
Pharmaceutical giant, SmithKline & French, develops Auranofin, a gold-based drug for the treatment of rheumatoid arthritis. The drug receives regulatory approval and goes on sale for the first time. -
1999
First Central Bank Gold Agreement
The First Central Bank Gold Agreement (CBGA) is agreed. 15 European central banks declare that gold will remain an important element of their reserves and collectively cap gold sales at 400 tonnes per year over next five years. -
2001
First gold used in heart surgery
Boston Scientific markets the first gold-plated stent (Niroyal) used in heart surgery. Inserted inside large arteries and veins, such stents act like scaffolding, propping open the blood vessels to allow adequate flow.
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2003
K-gold launched in China
The World Gold Council creates an entirely new market segment with the launch of K-gold, the first 18k jewellery in China. The jewellery, in predominantly white and yellow gold, takes its inspiration from Italian design. -
2004
Launch of SPDR® Gold Shares
The market is transformed by an innovative, secure and easy way to access the gold market. Six years later SPDR® exceeds $55bn in assets under management. -
2009
Central banks return to buying
In the second quarter of the year, central banks collectively become net purchasers of gold for the first time in two decades. This reflects a combination of slowing sales from European banks and growing purchases by emerging market countries.
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2010
Gold price sustains record highs
Fiat currencies are undermined by inflation fears and successive financial crises. The London pm fix achieves 35 separate successive highs in the year to date.
Demand and supply
Gold is rare. Today there are 165,000 metric tonnes of stocks in existence above ground. If every single ounce of this gold were placed next to each other, the resulting cube of pure gold would only measure 20 metres in any direction.
The demand for this precious and finite natural commodity occurs in many geographies and sectors. Around 60% of today’s gold becomes jewellery, where India and China with their expanding economic power are at the forefront of consumption. In East Asia, India and the Middle East, gold has powerful cultural meaning, accounting for approximately 70% of the world’s gold jewellery in 2009.
But jewellery creates just one source of demand; investment, central bank reserves and the technology sector are all significant. Each is driven by different dynamics, adding to gold’s strength and independence.
In creating supply, gold mining companies operate on every continent of the globe. This broad geographical dispersal means that issues, political or otherwise, in any single region are unlikely to impact the supply of gold. Beyond mine production, recycling accounts for around a third of all current supply. In addition, central banks can also contribute to supply should they sell part of their gold reserves. It is worth noting that after 18 years as net sellers, collectively central banks are now effectively net buyers, causing not only a significant decrease in supply but a corresponding, simultaneous increase in demand.
Read more about the forces of demand and supply in our Investment section.
For in depth research and insights into gold, download our detailed quarterly briefing Gold Demand Trends, which includes commentary on supply.
The golden constant
Since the 14th Century, gold’s purchasing power has maintained a broadly constant level. To put this in practical terms, an ounce of gold has repeatedly bought a mid-range outfit of clothing. This was true in the fourteenth century, when an ounce of gold was worth £1.25 to £1.33; it was true in the late 18th century and it remained true at the beginning of this century (2000 to 2008), when an ounce of gold averaged £269 or $472. Even the exchange rate between gold and commodities has been relatively constant over the centuries.
On the other hand, the US dollar that bought 14.5 loaves of bread in 1900 buys only 3/4 of a loaf today. While inflation and other forces have ravaged the value of the world’s currencies, gold has emerged with its capacity for wealth preservation firmly intact. Being no-one’s liability, gold exhibits the same wealth preserving qualities in the face of financial turmoil, earning a reputation as a crisis hedge in addition to its credentials as an inflation hedge.
The Golden Constant: The English and American Experience 1560-2007 by Roy W Jastram with updated material by Jill Leyland. Published 2009 by Edward Elgar Publishing Ltd (www.e-elgar.com), hardback, 368 pages, ISBN: 978 1 84720 261 1.
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Price
The gold price has risen every year since 2001 from its low of around $250. From then until November 2010 the gold price has risen to over $1400, a cumulative rise of 460%. Five of the years between 2002 and 2010 were marked by annual gains of 20% or more.
In today’s market, trading in several exchanges of both physical gold and gold derivatives determines the daily gold price, with the traditional London gold price fix still serving as the daily benchmark price. This fix is set twice daily at 10am and 3pm. The price of gold is usually measured in US dollars per troy ounce.
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Gold's price history
The city of London emerged as a metals trading centre in the late 17th century. It is widely considered to be the birthplace of the official gold price.
In 1696 the Bank of England brought gold to greater prominence when it informally established the world’s first gold standard. The Great Recoinage shifted the balance of coins in circulation from silver to gold. By the early 18th century, London’s position as the focus of international gold trade was secure, with the bulk of global gold finding its way to and through the city.
In 1717, Sir Isaac Newton, then the Master of the Mint, set the gold price at £4 8s 9d (£4.25) per troy ounce. This level remained largely unchanged for the following two hundred years.
During the 19th century, other nations became increasingly important gold market participants. The California gold rush, along with discoveries in Australia and South Africa, prompted a significant increase in global supply - and the emergence of a gold trade that bypassed London.
By the late 1800’s, several countries had officially adopted the gold standard, causing London to lose some of its authority as the world’s gold ‘centre’. The Bank of England was keen to return London to the forefront of global gold trading activity.
In 1919 the Bank of England signed an agreement with seven South African mining houses to ship their gold to London for refining. These mining houses agreed to sell all of their gold through the banking house N.M. Rothschild, with the price agreed upon by five members. The London fixing was thus established.
In today’s market, trading on several exchanges - of both physical gold and gold derivatives - determines the daily gold price, with the traditional gold fix still serving as the benchmark price. This fix is set twice daily at 10am and 3pm. In 1968 N.M Rothschild introduced the latter fix to coincide with the opening of the US markets. This price is now considered to be the more important of the two.
Though the process through which the fix is agreed has barely changed since its inception, none of the original member banks remain. Rothschild was the last to leave, resigning its chairmanship in 2004.
The current members are the Bank of Nova Scotia-Scotia Mocatta, Barclays Bank, Deutsche Bank, HSBC Bank USA, and Société Générale - with an annually rotating chairmanship. The fix reports the gold price in three currencies: US dollars, Sterling and Euros, per troy ounce.
Given the importance of US markets and the dollar as the world’s reserve currency, traders most frequently quote the US dollar price.
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Gold's contribution
Gold powers the internet. It underpins our economy. It is the bedrock of a portfolio. It is the catalyst for future revolutions in science. It expresses love in many languages. And it carries memories across generations and cultures.
Gold already underpins the world’s major currency systems; today the G20 nations are debating an even greater role for gold in a new world financial architecture.
Learn more about the proposed role for gold in the international currency basket.
Gold has provided an important store of wealth to diverse investors, from individuals to institutions, for centuries.
Find out more about gold’s unique investment characteristics.
Gold is the metal of love. It owns the moment when “I will” becomes “I do”. In jewellery form, it can quicken the heart-rate and grow in significance to become the most precious possession a woman will ever own.
Discover more about the heritage of gold jewellery.
From space exploration, to nanoparticle technology, to the bonding wire at the heart of an iPhone, gold’s extraordinary physical properties make it essential to a wide range of scientific applications.
Learn more about gold’s importance in technology.
From local training and employment opportunities to the creation of infrastructure, from the generation of governmental revenues to the development of whole communities, gold mining makes a tangible and transformational contribution to entire countries around the world.
Find out about the socio-economic advantages to gold mining.
Gold does much more than glitter.
Main Content
Numbers and facts
Some of the more extraordinary statistics which gold has accumulated across the centuries and around the world.
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79 protons The atomic number of gold, which means there are 79 protons in the nucleus of every atom of gold.
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49ers The 40,000 miners who joined the California Gold Rush in 1849 were called “49ers”. Only a very few ever got rich.
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50 miles One ounce of gold can be stretched to a length of 50 miles; the resulting wire would be just five microns wide.
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7.2 Million - the number of times that all of the existing gold in the world, turned into 5 micron wire, could wrap around the planet.
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9 metres square One ounce of pure gold could be hammered into a single sheet nine metres square.
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1064 degrees centigrade Gold melts at 1064 degrees centigrade.
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2808 degrees centigrade ...And only boils at 2808 degrees centigrade.
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165,000 tonnes This is the total number of tonnes of gold mined since the beginning of civilisation.
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20 metres cubed ... all of which would fit into a crate of 20 cubic metres..
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90% Over 90 percent of the world’s gold has been mined since the California Gold Rush.
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100 million million people worldwide depend on gold mining for their livelihood.
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31.103 grammes The number of grams in a troy ounce of gold.
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400 troy ounces The number of troy ounces in a “London Good Delivery Bar”.
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200 gold coins Julius Caesar gave two hundred gold coins to each of his soldiers from the spoils of war in defeating Gaul.
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4,600 tonnes Fort Knox holds 4,600 tonnes of gold.
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6,200 bars And the US Federal Reserve holds 6,200.
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37 degrees The temperature of the human body is 37 degrees centigrade. Because of gold’s unique conductivity, gold jewellery rapidly matches your body’s heat, becoming part of you.
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1oz It is rarer to find a one ounce nugget of gold than a five carat diamond.
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60% The percentage of gold mined today that becomes jewellery.
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394% increase The % increase in the price of gold from Dec 2000 to October 2010.
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750 parts per thousand The number of parts per thousand of pure gold in 18 carat gold.
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95 BC In 95 BC, Chinese Emperor Hsiao Wu I minted gold commemorative piece to celebrate the sighting of a unicorn.
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53cm The largest gold coin ever minted, a 2007 Canadian $1,000,000 Maple Leaf is 53cm in diameter.
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1922 Howard Carter made his famous “tiny breach of the top left hand corner of the doorway” to reveal the first glimpse of Tutankhamun’s tomb on 26 November 1922.
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15,000 tonnes Even at only 10 parts of gold per quadrillion, the world’s oceans are estimated to hold up to 15,000 tonnes of gold.
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2316 troy ounces The largest ever true gold nugget weighted 2316 troy ounces when found at Moliagul in Australia in 1969. It was called the “Welcome Stranger”.
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US$55 billion In November 2010, the SPDR Gold Shares (GLD) fund, a World Gold Council sponsored exchange traded fund, held over $55 billion assets under management.
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60% World Gold Council members collectively represent around 60% of all corporate mining activity.
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The number of times gold has reached a new high in 2010.
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