HISTORY - A look at the impact of gold over the ages


    The Assyrians and Babylonians, who were more active traders than the Egyptians, took things a step further by stamping their gold bars with different emblems (lions and ducks) for different weights. Similarly with the Mesopotamian peoples, who broke their lumps of gold into weighted denominations. However, uniformity of all these resultant gold pieces wasn't a given, and so trading still involved checking of weight and purity. Gold couldn’t really take off as an acceptable form of money until there arose easy standard ways of measuring weight and purity.

    It’s worth noting that the crude gold bars mentioned above, made from melted down gold, were still a lot better than trying to use natural unaltered gold, as natural gold comes in different forms such as inconvenient alluvial flakes and dust and unpredictable nugget sizes. The desire to tame gold for functional use was more important than preserving the natural beauty of gold nuggets - a mindset that would last nearly six thousand years (until the 1990s to be exact!) and see the destruction of the vast majority of nuggets that the planet ever has or ever will produce. But for the needs of the time the crude gold bars served a purpose, and their form evolved as need grew.

    The pivotal sequence of events which led from crude gold bars as money, to a fully-fledged system of accepted gold coinage, took place in eastern Asia Minor, now Turkey, and could be said to start, believe it or not, with the legend of King Midas.

    King Midas was said to live in the small kingdom of Phrygia, the capital city of which (also named Phrygia) was located on the banks of a mountain river known as the Pactolus. King Midas was granted a wish by Dionysus, the God of Wine, in return for the hospitality shown to Silensus. King Midas wished that everything he touched turned to gold, a wish that, after the initial excitement wore off, turned out to be not such a great idea, as everything he tried to eat or drink, then even his daughter, turned to gold when coming into contact with him. He was soon begging Dionysus to relieve him of this golden burden. Dionysus took pity and instructed King Midas to wash himself (and his daughter) in the Pactolus, thereby rinsing off his golden touch to the river.

    Though certain details in this legend may stretch credulity, the Phrygians certainly existed as a people, as did their close neighbours the Lydians, and both peoples benefited greatly from a gold-bearing Pactolus River. (Though the Pactolus can no longer be seen today, geographers believe it was a stream carrying alluvial gold from the slopes of Mount Tmolus in Anatolia.)

    The Lydian capital was the city of Sardis, and the Lydians used their good fortune of sitting on such a good supply of alluvial gold streaming down the mountains to recover gold from the Pactolus River and also to mine a metal called 'electrum', often referred to as white gold, which was about two-thirds gold and one-third silver. The electrum was used to make crude bean-shaped lumps called ‘dumps’, which formed the Lydian money at that time (around 700 BC).

    The Lydian King Gyres (first of the Mermnad line of Lydian kings and who ruled from about 716 BC to 678 BC) made the innovation of establishing a state monopoly over the creation and issuance of dumps. This reform of state-issued money was quite revolutionary, and has persisted throughout history to the present day.

    King Gyres was succeeded by his son Ardys, who began stamping the electrum ingots with marks to guarantee their weight and value, and issued different sets to different regions of his empire. Within fifty years (around the end of the reign of Ardys or the beginning of the reign of his son, Sadyattes) the shape and size of these ingots became more uniform, turning into the first recognisable coins: round, uniform, and clearly stamped. Each of them had a lion's head, the logo for the Gyres dynasty.

    Ardys was succeeded by his son Sadyattes, who was succeeded by his son, Alyattes. Alyattes was the first to issue pure gold coins (rather than electrum), which developed into a lucrative source of exports for Lydia. That is to say, the gold coins were not only found acceptable by outside trading partners, but were quite desirable (everybody loves and values gold), and hence were sought after by these trading partners. As such, the gold coins paid for much of Lydia’s imports, considerably raising the standard of Lydian living.

   By this time an ingenious Lydian invention had come into being that helped facilitate the use of gold in trade: the touchstone. This was a local black stone, similar to jasper, which was found to be useful in testing the purity of gold. When gold was rubbed against the touchstone it would leave a mark, which was compared to a set of twenty-four needles containing varying proportions of gold and silver, gold and copper, and all three metals. The twenty-fourth needle was pure gold. The touchstone was invaluable for the confidence it gave traders that their gold payment was indeed worth as much as claimed. (Purity of gold is now defined by 'carat', where twenty-four carats is 100% pure. Carat was originally a measure of weight rather than purity, as carats were the fruit of the leguminous carob tree, every pod of which weighs pretty much one-fifth of a gram. Today the carat has been replaced by the 'grain' as the conventional unit of weight. The weight of a grain of barley or wheat in the middle of the ear has the same weight regardless of the weight of the ear. Note, however, that although ‘grain’ is the official unit of weight, most people are more familiar with ‘grams’, so don’t get the two confused. Gold is also measured in the Troy ounce (named after the French town of Troyes where the measure was first put into use), which is 480 grains (or 31.1 grams). For more on weights and measurements, particularly in relation to the purchasing of gold nuggets, see my Measurements and Buyer’s Tips sections.)

    However the climatic role of the process to gold coinage was not played by Alyattes, but rather his son, King Croesus (595 BC – c. 547? BC, pronounced CREE-sus; of the saying “as rich as Croesus”). Recognising the value of the gold coins to his country's prosperity, King Croesus recalled all the outstanding electrum coins and melted them down to mint pure gold and silver coins. They were stamped on one side with the foreparts of a lion and a bull (the arms of the city of Sardis), and the opposite side had oblong and square punch marks to show their value. The gold coins were called staters, and Croesus set the silver coins to one tenth the value of the gold coins, thereby cementing the bimetallic currency system that would prevail throughout most of history from that point forward.

    There are also many old biblical references to gold, including God telling Moses, at the time of giving him the Ten Commandments, to build a tabernacle and specifying that “thou shalt overlay it with pure gold, within and without shalt thou overlay it, and shalt make upon it a crown of gold round about”. God obviously knew a good thing when he saw it, and the same might be said for the ancient people themselves: as is described in more detail on this site’s Gold page, gold’s natural shining lustre and resistance to tarnishing, together with its extreme malleability, durability and startling density, made it attractive to ancient peoples for use in jewellery, adornment and art. This naturally led to it becoming a desired commodity, and hence coming to be considered a store of wealth.

    A store of wealth, however, is quite different from a form of money. For example, we might consider a house to have intrinsic value and therefore to be a store of wealth, however it’s not possible to have a couple of houses in one’s pocket with which to buy a loaf of bread at the shop. A form of money for a given society must be a convenient and acceptable method of payment for those within the society, and preferably also acceptable to outside societies to help foster trade. A store of wealth tends to ‘sit’, and usually sits with society’s elite, whereas money ‘moves’ and is available to all.

    Gold in ancient Egypt was entirely the domain of the pharaohs and priesthood. It was used as a show of great power and wealth. Yet the beginnings of gold’s journey to become a form of money (and eventually, for a time, the worldwide standard of money) started in ancient Egyptian times. The Pharaoh Menes cast gold bars with his name on them, and even set silver equal to 10% as much as gold. However with just about all possessions of note belonging to the pharaoh, and with trade being mainly local and agricultural, monetary transactions were rare or of minor importance.

    Though gold itself does not tarnish, one might say that its history with humanity certainly is tarnished... Somehow the hope, wealth and joy that gold can bring, is often counterbalanced by despair, treachery and tragedy...

    With the following paragraphs I hope to give as coherent and understandable an overview as possible of what is obviously a complex subject. My sources are various encyclopaedias and internet research, together with a special credit to the book The Power of Gold by the historian and economist Peter L. Bernstein. This book is a wonderful read, bringing to life the history of gold with more flair and flavour than I could hope to engender here. If the journey of the below paragraphs in any way whets your appetite, I highly recommend snapping up a copy of this book from the Other Items section of the Nugget Gallery. For those who want an even fuller experience, there’s many an enjoyable afternoon’s reading to be had with the combination of The Power of Gold in one hand, and an actual gold nugget from the Nugget Gallery in your other hand, to more fully appreciate what all the fuss is about...

    Humanity’s first introduction to gold, lost in the mists of time before recorded history, was undoubtedly as a shiny gold nugget, perhaps washed up on the edge of some stream and happened upon by an early human. Due to gold’s wide geological distribution across the globe, this type of scenario would have played out at a number of places. The first recorded use of gold, however, was as adornment and for religious purposes, for example by the ancient Egyptian priesthood and royalty from at least four thousand years BC.

Mummy cartonnage bearing the name Tacheretpaankh, made from layers of canvas that were glued, stuccoed and gilded (thinly covered with gold), 3rd-1st centuries BC. Credit: Guillaume Blanchard.

Ancient bowl of solid gold from the tomb of an Egyptian Pharoh, now found in the British Museum. When Pharohs were entombed, valuable objects that they might need in the after-life were buried with them, and gold was often chosen for its perpetual resistance to corrosion. Credit: public domain.

Statuette depicting Isis, Osiris and Horus, made from gold, lapis and red glass, 874–850 BC. Credit: Guillaume Blanchard.

Stater coin, time of Croesus, Sardes mint, circa 561-546 BC. Credit: CNG Coins, Ronald Cohen Collection.

    When Croesus's reform was complete, he had established the first imperial currency in the history of the world; a rational, systematic and widely acceptable form of money. His beautiful coins of gold and silver were not only accepted, but demanded, throughout Asia Minor and somewhat beyond, stimulating trade and prosperity in the region.

    Though King Croesus ruled successfully for many decades (and was “as rich as Croesus”, as the saying goes), he was eventually defeated and dethroned by the Persians in about 547 BC, hence fulfilling a prophecy by the Oracle of Delphi a few hundred years earlier that said the reign of the Mermnad line would end in the fifth generation (which, unluckily for Croesus, turned out to be Gyres, Ardys, Sadyattes, Alyattes, Croesus). Ironically, Croesus consulted the Oracle of Delphi of his own time on whether or not he should make war on the Persians who were becoming powerful and a worry. He was told by the Oracle that if he did he would “destroy a great empire”. Sufficiently encouraged by this prophecy he went to battle with the Persians and was defeated... In hindsight the Oracle's prophecy referred to his own empire.

    The Persians, Macedonians, Greeks and Romans followed suit with gold coinage over the following few centuries, with the Roman need for gold growing rapidly after about 150 BC with the accelerating expansion of their empire. Gold was used to pay soldiers and finance armies and administer the state... Needless to say, running an empire is an expensive business.

    In fact, from about 50 BC the Roman's demand and need for gold significantly outweighed the availability of it. When a nation's supply of its monetary metal is insufficient to meet its needs for coinage, there are three options: i) to live with an insufficient supply of money, so the demands for goods at current prices chronically falls short of the supply of goods offered for sale, and downward pressures on the price level persist over extended periods of time (a painful process, with dire political and social consequences, such as during the Great Depression of the 1930s); ii) import gold from other areas either by plunder or trade; or iii) use the same amount of metal to produce a greater supply of coins, a process known as debasement (sounds like the simplest solution, but is unlikely to be successful over the long run).

    The Romans opted for debasement, melting down coins to produce smaller ones of the same face value. This came to a critical head in AD 260 when Gallienus became emperor. When he started his reign, silver coins had 60% less metal than when Augustus became emperor (27 BC), but by the end of his reign eight years later he'd cut down the silver content to a mere 4%. This resulted in wild price inflation and caused the Roman currency to become a financial wreck, and in some cases a physical wreck, such as their copper coins which ended up with so little metal they became thin and frail. Their gold coins fared better, however, as although they were reduced in size and gold content, they were not alloyed with other metals.

    When Diocletian came to power in AD 284 after Gallienus, he spent twenty years trying to reform the Roman currency and bring inflation under control. This was continued by his successor Constantine I from AD 306, who set out to improve the acceptability and respectability of the Byzantine currency by minting and issuing a new gold coin called the gold solidus (the Latin word for solid), which later became known as the bezant. They weighed 4.55g and were 98% pure. The bezant continued in production, with unchanged weight and purity, for over 700 years, even after the fall of Rome (often dated around 476), making it the longest lived coin in history.

Solidus (4.54g), showing Constantine II as Caesar, circa 317-337 AD. Credit: CNG Coins.

    The Dark Ages after the fall of the Roman Empire saw people hoarding gold and gold coins against the fear and insecurity of the times. This habit of hoarding gold at times of uncertainty and fear has continued throughout history, sometimes in more elaborate ways than burying it in the backyard - for example the Bank of England's efforts to build and preserve gold reserves in 1930 and 1931 - but the basic principle remains the same. Even today, in times of financial crisis, gold is still considered one of the safest havens to store and preserve wealth.

    The Byzantine emperors after the fall of the Roman Empire used gold lavishly to express power, and also used gold to bribe both enemies and allies to keep their sprawling territories safe from attack. Their major gold source for all this was the Nubian mines in southern Egypt and Sudan, but when this territory fell to the Arab Muslims the Byzantine Empire suddenly had to rely more heavily on trade, and embarked on a program of trying to maximise exports and minimise imports so as to keep gold coming in to fund coinage of their powerful bezant.

    Much as with the Lydians before them with their revolutionary stater, the foundation of Byzantine wealth and financial clout continued to be the magnificent and widely accepted golden bezant. As a contemporary of the Byzantine times put it, the golden money of the empire “is accepted everywhere from end to end of the earth. It is admired by all men and in all kingdoms, because no kingdom has a currency that can be compared to it”.

    The bezant has been called by some modern scholars, for example Lopez, as “the Dollar of the Middle Ages” (referring to the American dollar of course). In fact, it was arguably better than the dollar: as he goes on to say, “the bezant outstripped the Dollar in stability and intrinsic value. Indeed, its record has never been equalled or even approached by any other currency”. Lopez continues, “The bezant was more than a lump of gold. It was a symbol and a faith, the messenger of the divine emperor to his people and the ambassador of the chosen people to the other nations of the world”.

    It is this spirit of national prestige that led another Byzantine contemporary to declare, “It is not right for the Persian king or for any other sovereign in the whole barbarian world to imprint his own likeness on a gold stater, and, too, though he has gold in his own kingdom; for they are unable to tender such a coin to those with whom they transact business”. One hundred years after that quote, Justinian II (who reigned from 685 to 695 and again from 705 to 711) went to war against the Arabs because the Caliph had struck gold coins with his own portrait. Justinian lost, though chroniclers of the time still wrote, “It is not permissible to impress any other mark on gold coins but that of the Emperor of the Romans”. The Muslims later replaced the portraits and religious figures common on bezants with quotations from the Koran, thus distinguishing their Arab dinars for hundreds of years. The dinar, 97% pure gold, also became a widely accepted and sought after gold coin, representing the prestige and glory of its issuers.

    As the gold coins of those times were so integral to the power structure of a state, its no surprise that what appeared on the coins could be a hot topic, such as expressed in the quotes above. Early issues of bezant coins portrayed images of the emperors and sometimes their sons or spouses. However when Justinian II took the step of exhibiting a bust of Christ on his coinage in 695, it was too much for the times and helped ignite the Age of Iconoclasm (destruction of religious icons) as well as cementing the above-mentioned breaking away of the dinar from Byzantine-like coin styling to a purely Islamic coinage with lettering only.

Aghlabid gold quarter dinar, circa 879 AD during the reign of the Aghlabid emir Ibrahim II  Credit: public domain.

    When the Age of Iconoclasm ended in 843, religious symbolism returned to bezant coins in such forms as emperors holding crosses, an occasional Christ bust on the side opposite the emperor, and the like. A bold example was Emperor John I Tzimisces who issued coins showing him being crowned by the Virgin herself with the hand of God above (such imagery lending much weight to Lopez’s last quote above).

    And so the longevity of the bezant continued for another few centuries... until Constantinople fell to the Crusaders in 1204, at which point the golden run of the golden bezant finally began to come to an end. It began to lose its purity to debasement, and as a result its wide acceptability began to wane. Fifty years later, the rising Italian trading powers of Florence, Genoa, and Venice began issuing gold coins that gained as much stature in their own time as the bezant had enjoyed in its, and by the middle of the fourteenth century the citizens of Byzantium were actually paying their taxes in Venetian gold ducats. Constantine IX was reigning when Constantinople finally fell to the Turks in 1453, and looks to be the only Byzantine emperor never to have issued any coins.

    During the Byzantium era (say, from 330 when Constantine I founded Constantinople as a second Rome on the site of Byzantium, to its fall in 1453) the Arab Muslims had a comparable (and oft times competing) appetite for gold in their own right. They accumulated it through astute trading as well as zealous warfare, claiming booty from conquests in Persia, Syria, Egypt, Palestine and North Africa. They also reopened old gold mines in Egypt, Nubia and Ethopia. And although they, like others, weren’t able to pinpoint and conquer the mysterious source of African gold (where they were obliged to trade with the natives for it - sometimes receiving an ounce of gold for an ounce of salt (!), a much needed and scarce commodity in the region), their overall supply of gold was ample, funding the minting of their esteemed dinar from its first issuance in the late seventh century.

    In contrast to the Arabs and Byzantines, the use of gold in Europe during that timeframe was much less prevalent, mainly due to less gold being available to them, one reason for which was no mines that could match the natural supply available to the Byzantines and Muslims. As such they had to reject the Byzantine fashion of covering as much as they could with gold. This can be seen in the more austere European churches of the time. On occasion gold was in such short supply that religious ornamental objects were melted down to be minted into coins.

    However one art form the Europeans did follow the Byzantines in was that of chrysography, where gold or silver was used in leaf form, or powdered and bound in gum arabic or egg (called ‘shell gold’), to create illuminated manuscripts with decorated initial letters, borders and miniature illustrations of striking beauty. Charlemagne in particular, who ruled as King of the Francs from 768 to his death in 814, insisted on the highest standard for books produced during his reign. Much of this work was done by an English cleric, Alcuin of York. Some of these texts are very famous, such as the Godescalc Gospels and the Saint-Methard Gospel Books, with the latter written entirely in gold calligraphy (a single capital letter in chrysography could take more than a day to complete). The lettering was formed with great care and deliberation, and it’s an interesting fact that Alcuin had much to do with the development of what’s known as the Carolingian minuscule script, where for the first time it became common to mix both upper and lower case letters in a single text, and from which is descended the cursive writing we learn in school today.

From the Godescalc Evangelistary, commemorating the baptism of one of Charlemagne's sons in Rome in 781 and picturing the Fountain of Life. Credit: public domain.

The Drogo Sacramentary, a Carolingian illuminated manuscript on vellum, circa 850, was written and painted for the use of Charlemagne's son Drogo, Bishop of Metz. A sacramentary is a book containing all the prayers spoken by an officiating priest during the year. Credit: public domain.

    As the year 1000 dawned in Europe, the somewhat more peaceful times saw increases in population which allowed greater specialisation. This in turn caused advances in the use of gold in trade and finance. A defining part of this period, the Middle Ages, was the Crusades (roughly from 1095 to 1450 in one form or another). Though there were probably those who took part for what they saw as genuine religious reasons, there were also many in it for the massacre and looting, urged on by dreams of riches and treasure to be won. Indeed, the looting of riches, particularly gold, was a necessary part of the process in order to finance the massive costs of the campaigns. Army mercenaries were often paid in gold.

    It was in 1252 however that a significant jump occurred in the use of gold coinage. A few gold coin currencies were around prior to 1252, such as Fredrick II's augustalis (20.5 carats, 5.28g), the Arab dinar (97% gold), the tari (16.333 carats) and others, but the 1252 coining in Genoa of the 24 carat genoin (3.5g) set off a chain reaction: a few months after the issuing of the genoin by Genoa came the Florentine fiorino d'oro, then gold coinages from Perugia, Milan and Lucca (all 3.5g of 24 carat gold). The Venetian ducat (also 3.5g of 24 carat gold) appeared in 1284 and became the most well known and successful of these thirteenth century-born gold coins. This spawning of gold coinage was due to a combination of factors; state competition for prestige and financial power was one, as was the general needs of commerce at the time (of which the ongoing Crusades had a notable impact). It is of significance that these coins originated in economic centres (Venice, Milan, etc) rather than nation capitals (London, Paris, etc), indicating the nature of the forces at work.

Venetian ducat, circa 1382-1400. Credit: public domain.

    Despite the European advances of the thirteenth century, things took a turn for the worse in the fourteenth century - perhaps the most dreadful century on record for its run of disease, famine, chaos and warfare. The sorry story started in 1314 and 1315 with two consecutive years of failed harvests due to unusually cold and wet summers. Other unusually bad weather events and natural disasters followed. The Great Famine, as it came to be known, was followed by the Black Death in 1347, a truly devastating plague that killed some twenty million people - a third of the population from India to Iceland.  Some of the big cities experienced a death rate of over 50 percent (astounding when you think about it; orders of magnitude worse than the swine and bird flues we’ve worried about in more modern times). People died so unexpectedly fast that there wasn’t time for the usual rites and burials.

    Also unexpected was the economic consequences of all these deaths. Though human bodies were being carted away, quite literally, by the cartload, all of their possessions and wealth remained behind. Thus the survivors of the tragedy ended up far richer than they were before the dying started. This increase in monetary wealth, combined with a reduction in availability of labour, resulted in driving up the wages and income of the working class significantly. Workers left their farms and village trades to live it up in the cities. It was lucky that what would have been a huge hike in the price of food was more or less counterbalanced by the reduction in food demand due to the loss of population.

    The sudden ability of common people to live above the means they had previously been restricted to, led to a time of, as one contemporary put it, “frenetic gaiety, wild expenditure, luxury, [and] debauchery”. Another complained of “the spectacle of the popolo minuto who refused to practice their old trades, dressed themselves in a manner unbefitting their station and insisted on the finest delicacies at their table”. This caused the government and upper class to propose and enact various laws to try to keep the lower class in their place and thereby the fabric of society intact. Various laws were passed restricting the types of fabrics different classes were allowed to wear, restricting lavish use of gold as personal adornment, and in some cases even limiting the freedom of movement of workers between villages. These laws, of course, met with dubious success. The increased taste for luxuries of the European populace as a whole led to increased demand for gold and silver to support the import of such luxuries from abroad. The supply of precious metals, however, did not support the rising demand, with general minting of gold coins below pre-Black Death levels.

    Things in general improved in the course of the next century or so, with populations recovering from the Black Death. However European gold production during the fifteenth century was smaller than ever relative to demands. A fascinating fact from this point in gold’s journey was that the entire amount of gold in Europe in 1500 in all forms - coins, jewellery, artwork, decorations, hoards, everything, from some three thousand years of developing civilisation - could have been fashioned into a single cube only two meters in each dimension. So it can be seen that even small new supplies of gold would a have significant impact on the financial system that gold was now a crucial part of.

    This period was sometimes referred to as the Bullion Famine of the Fifteenth Century. And as usually happens when money is in short supply, people try to save money, which resulted in a falling price level. Reliable estimates indicate that prices for commodities in western Europe fell by 20-50 percent during the course of the century. At the same time the demand for gold was so great that its price moved upwards - its purchasing power doubled. As such, the fifteenth century was one of the few periods in history when gold was spent rather than hoarded.

    It could be argued that this tempting combination of falling commodity prices and rising gold prices was in a large way responsible for the great explorations of the fifteenth century, as great rewards awaited those who could find new gold sources. Of course the human desire to explore was also there, as was the perhaps even greater zeal to convert heathens to Christianity, but the burning hunger for gold was never far from mind, often with no attempts to hide it. This is seen in a great quote from Columbus, writing to King Ferdinand and Queen Isabella of Spain about his encounters with the natives of the lands he was discovering: “So your highness should resolve to make them Christians, for I believe that... you will achieve the conversion to our holy faith of a great number of peoples, with the acquisition of great lordships and riches and all their inhabitants for Spain. For without doubt there is in these lands a very great amount of gold”.

    The Portuguese, with their renowned ocean skills and more coastline facing the sea than any other European nation, led the way to the Discovery of the New World. The Spanish weren’t far behind. They all claimed they were on a new crusade to smite and convert infidels, though gold was usually the primary objective, and slavery a convenient side trade that facilitated the joint aims of gold production and religious conversion. Indeed, King Ferdinand had actually commanded Columbus, “Get gold, humanely if possible, but at all hazards - get gold”.

    Undoubtedly the most appalling outcome of that mindset was the Spanish conquering of the Incas, the climax of which occurred in 1532. The entire exploit was a particularly gruesome affair with atrocious acts by the Spanish, the plundering of a huge amount of gold, and the bloody destruction of the Inca civilisation. It was capped off by one of the most infamous acts of treachery in history; the leader of the Spanish Conquistadors reneging on a ransom deal with the Inca ruler, killing him instead.

    The Inca skill in gold craftsmanship was breathtaking, but the vast majority of the plundered treasure that travelled to Spain was melted down for the king's coinage (showing a similar lack of appreciation of rarity and beauty that would see the destruction of the majority of the world’s gold nuggets during the nineteenth century gold rushes in 300 years time). Only a tiny fragment of Inca golden artefacts and artwork survived the melting pot.

Solid gold Inca cup. Credit: Bates Littlehales.

Inca gold mask. Credit: public domain.

Inca female figurine. Credit: public domain.

Male Inca figurine for Capa Cocha (human sacrifice) rituals, circa 1450-1540. Credit: Thomas Ruedas.

    After the Spanish had plundered every golden object they could lay their hands on, they settled down to exploit the conquered natives in gold mines, with a resultant disastrous effect on the native population. Ironically (and tragically) even after all this blood letting, the great deluge of gold from the New World to the shores of Spain did not bring Spain the wealth and power it desired and expected. Spain totally mismanaged the unique windfall of gold: it flowed right through Spain in wasted spending with little to no actual asset production. It flowed to the rest of Europe, and from there east to Asia in trade for spices, tea, silks and other luxuries desired by the Europeans.

    The tone of the following century, the sixteenth, was dominated by such a dramatic and long-lasting surge of inflation that it was referred to as the Price Revolution of the Sixteenth Century. How much this had to do with the recent influx of gold into Europe via Spain is still a matter of debate, but regardless of the reasons, the effect on the populace of out-of-control price rises for the better part of one hundred years was devastating, and made all the more frightening due to society as a whole having no prior experience with inflation and no idea how to handle it.

    Nevertheless, the sophistication of the financial sector during this time and the following decades continued to evolve. There was an increase in the use and sophistication of promissory notes and bills of exchange (the forerunners of modern paper currency). Over time gold coins were less seen in actual circulation, and gold bullion was used to settle up only very large transactions or unfavourable balances of trade between countries. Gold was still as desired and as valuable as it ever was, but the role it played in the system began to change.

    Throughout all these centuries gold did not travel alone - it was accompanied by silver, and sometimes coins of copper or other denominations, right back from the time of King Croesus on the Pactolus River, minting his gold and silver coins and setting the value of silver to one tenth that of gold. In fact there were many societies where silver money was more prevalent in everyday use compared to gold, it being a more convenient value for the transactions of common people.

    One such society was England, and the dynamic tension inherent in a bimetallic currency system came to a head at the end of 1695 when England went through what became known as the Great Recoinage. Although successive governments had procrastinated for a number of decades, the Great Recoinage could not be avoided forever, as the handiwork of ‘clippers’ had become all too injurious on the nation’s coinage, particularly the much-used silver coins. Clipping was the crime, punishable by death, of shaving off a tiny amount of metal from a coin. Collecting such clippings over a period of time and melting them into bullion could turn a tidy profit, an activity all too tempting for some, despite offenders being hung by the dozen. The Great Recoinage was needed to replace all the old coins (many of them clipped to - if not a shadow of their former selves - at least to a non-standard and less valuable weight) with new machine minted coins with engraved or textured edges that couldn't be clipped without notice.

    The Recoinage ended up involving complex issues (and many debates) regarding the relative price of gold to silver - a problem inherent in a bimetallic currency system, and further complicated by coinage that could also be converted to commodity (ie coins to bullion and visa versa). In simple terms, the price of gold had become too high, making it profitable to import gold bullion, coin it into golden guineas at the mint, exchange the guineas for silver coins, then melt down the silver and export it to the East. As silver was the standard by which the English pound sterling was measured, the government attempted to rectify the situation in 1717 by refusing to accept the guinea (as payment in taxes, etc) at anything more than 21 shillings (the market price had risen as far as 22 shillings for the guinea). This value of 21 shillings was recommended by none other than Isaac Newton, who was Master of the Mint at the time. Unfortunately this was one time when Newton got it wrong, as the 21 shilling value didn't have the intended effect of bringing the price of gold down closer to silver, but rather the price of silver rose closer to that of gold. This in effect - and this is a very important point - meant that the markets themselves, independent of governments or any sort of decision making, had established gold in place of silver as the standard for the pound. Though many people at the time still considered silver to be the standard, the reality of the markets since 1717 set gold as the standard.

    In 1797, fear of the French invading Britain was triggered by three French navy frigates landing in a small fishing village named Fishguard. Though they were beaten off quite easily, the resulting panic led to a run on banks to convert bank notes to gold. This led the government and the Bank of England to suspend convertibility to gold - the Restriction Bill. This was a shocking and unheralded move, as up until that point the whole bank note system of the Bank of England functioned on the given that they were convertible to gold (thereby making the bank's notes, quite literally, “as good as gold”). The government followed this up by making bank notes legal tender in their own right, another historic move. The direct link between bank notes and gold was broken, for the time being anyway. Convertibility of bank notes to gold was not reinstated for twenty-four years, far longer than anyone would have dreamed.

    The breakage of this link, while at the same time with a continued supply of money and credit delivered by the Bank of England into the financial system, gradually led to significant price inflation. This caused the price of gold to begin a rapid ascent in 1808, causing concern in the financial community. The government appointed a committee (which became known as the Bullion Committee) to look into the matter.

    The Committee's opinion was: “In this Country, gold is itself the measure of all exchangeable value, the scale to which all money prices are referred” and “Gold in Bullion is the standard to which the Legislature has intended that the coin should be confirmed and with which it should be identified as much as possible... It is most desirable for the public that our circulating medium should again be conformed, as speedily as circumstances will permit, to its real and legal standard, Gold Bullion” and “Bullion is the true regulator both of the value of a local currency and of the rate of Foreign Exchange”. One of the country's most eminent merchants, in giving evidence to the Bullion Committee, declared that the inflation problem had arisen because the Bank was “not allowing Bullion to perform those functions for which it seems to have been intended by nature”. How’s that for a resounding endorsement of the shiny yellow metal?

    A key point discussed by the committee was that without convertibility of the currency into gold, the management of the financial system had by default fallen to the directors of the Bank of England, with everything riding on their day to day decisions on how much money and credit to supply to the system. It was the committee’s contention that this was an impossible ask of any mortal, due to the extreme complexity of financial systems, and that they were doomed to fail (hence the alarming rise of inflation). The only safe arbiter was gold itself, a role it would automatically play as a function of currency being convertible to gold.

    After much in the way of public debate and more hearings, the government finally restored the convertibility of Bank of England notes into gold in 1821. This was facilitated by post-war deflation driving prices back down to their 1797 level, so any distortion that would have occurred by reinstating convertibility of paper currency to gold when the value of paper currency had in effect changed (one of the arguments against reinstating convertibility) had conveniently been washed out of the system. A new gold coin was issued to mark the occasion - the sovereign.

    The re-establishment of convertibility confirmed the gold standard as a market reality and entrenched it in official legislation. The system the British now found themselves on became the model for the rest of the world to follow for the next hundred years. It put metal above man in managing the nation's money supply. Most people want more money than they have, but easy money can lead to inflation in which all the extra money loses value. The expression of faith implicit in the gold standard was in the ability of free markets, expressed by changes in the price of gold, to do a better job than policymakers at managing money supply. The idea was that gold supported a system of checks and balances to keep the money supply at an optimal level.

    So what happens when a gold influx enters the financial system as huge as the American, Australian and South African gold rushes of the second half of the nineteenth century?

    The magnitude of the nineteenth century discoveries were far beyond anything seen previously - they made the gold of Croesus and the Inca conquest look like drops in a bucket. However the economic impact of these discoveries turned out to be quite different from the Price Revolution of the Sixteenth Century. In fact, quite the opposite happened compared to what most experts expected.

    Firstly though, to put the magnitude of the new discoveries into perspective, consider the following. The Spanish gold discoveries in the New World lifted world output of precious metals (gold plus silver) in the course of the 1600s to over seven tons a year, which was approximately double what it had been before those discoveries. By 1700, the total world stock of precious metals was five times as large as it had been before the conquest of the New World. Then there was another doubling of production in the eighteenth century thanks to further discoveries (such as in Brazil by the Portuguese). However by 1859, with the new Californian, Australian, and Siberian gold rushes underway, total world output of gold alone was 275 tons a year - more than ten times the annual output during the eighteenth century. (This production rate meant that it only took ten years to produce as much gold as had been produced from all sources over the entire 356 years from the Discovery of the New World to 1848.) By 1908 world gold production was over one hundred times what it had been in 1848. The total amount of gold in all forms in 1908 - coins, jewellery, artwork, decorations, hoards, everything - could have been fashioned into a cube ten metres in each direction; an enormous expansion from the two metre cube of 1500 that took three thousand years of developing civilisation to gather. The nineteenth century discoveries were orders of magnitude greater than anything that had been seen before.

    The character of the nineteenth century gold rushes was also very different from the gold finds of the 1600s. Whereas the gold of the New World was found by mercenaries representing their king and employing military power to claim and plunder, the gold in California and Australia was discovered by independent prospectors working for themselves in a pioneering and adventurous spirit.

    So what effect did all this new gold have on the world financial system? There was great concern amongst experts in economic circles that the huge influx would create disastrous inflation, as with the Price Revolution of the Sixteenth Century, or even worse, blow out the system entirely. However, the times happened to coincide with a great explosion of economic growth, together with being a relative peaceful and stable time for the world, and so contrary to the best expert opinions of the time hardly any inflation due to the new gold input was seen; a very different and unexpected outcome compared to the Price Revolution of the Sixteenth Century.

    The new input of gold did, however, have an unmistakable impact on certain other aspects of the financial realm, such as the demise of silver as a monetary form and the rise of a truly international gold standard... But more of that later. Let us first look a little more closely at the gold rushes themselves, stuff of legend that they are, and surrounded as I am personally by the traces and presence of old prospectors gone before me every time I head out bush to hopefully find something they’ve missed...

    The first (and least famous) of the nineteenth century gold rushes was in Siberia, which by 1842 was producing 11 tons of gold a year. By 1847 the Russians were supplying over 60 percent of world gold production. However, it was more of a state-run affair, with lowly paid workers digging in cold, rough and marshy conditions for the tsar, or for rich landlords taxed by the tsar. The miners could not keep any of the gold they found.

    The real excitement for independent prospectors and adventurers - what we think of as a gold rush - started at Sutter’s Mill in California. It was 24 January 1848 when Johann Sutter’s chief mechanic, James Marshall, showed him in secret more than an ounce of gold flakes he’d found at the site of a mill he was building for Sutter on the American River. Sutter comprehended right away the dire consequences the find would have on his extensive cattle, sheep and pastoral lands, so rode up and swore the mill workers to keep the discovery a secret, at least until he could finish building his flour mill. He complained later that “women and whiskey let the secret out”, though he managed to keep knowledge of the discovery confined to his workers and operations for another three months. But on 4 May a neighbour who had visited the site ran into San Francisco with a bottle of gold dust shouting, “Gold! Gold! Gold from the American River!”. Within a few weeks San Francisco had emptied of shop attendants, teachers, and all manner of workers, as people headed to the hills to try their luck. In a time even before radio, let alone television or the internet, it took longer for news to spread to the rest of the country, so the rush proper didn’t really get going until 1849 (hence the term Forty-Niners rather than Forty-Eighters). Within three or four years over one hundred thousand people had thronged to California, including twenty-five thousand Frenchmen and twenty thousand Chinese. Annual gold production peaked at around 95 tons at the height of the rush.

    Many Australians also headed across the Pacific to try their luck. Among the first in 1849 was English-born Edward Hammond Hargraves, but after two years of fruitless prospecting and panning in California he’d come up empty-handed and spent his last dollars to get back to Australia. He must still have been somewhat hopeful, however, as he took his panning equipment back home with him; he’d been struck by the geological similarities between the gold areas in California and some areas he was familiar with back in Australia. Sure enough, on 12 February 1851, while riding on horseback with a guide near the Macquarie River in New South Wales, Hargraves said he felt “surrounded by gold”, and indeed gold came up in their first few pans from the river.

    It should be noted that this wasn’t the first documented appearance of gold in Australia. There’d been up to a dozen not well known isolated and minor finds, one of the earliest dating back to 1823 when Assistant Surveyor, James McBrien, discovered some gold tailings in Fish River, near Bathurst, New South Wales. Another of these minor finds was by Reverend WB Clarke in 1841. When Clarke reported his discovery to George Gipps, the New South Wales Governor, Gipps asked Clarke to “Put them away, Mr Clarke, or we shall all have our throats cut!”. It seems that gold finds in the convict society of the time were not welcomed. Hargraves’s find in 1851 was significant in that it was ‘payable’ gold (enough of it and easy enough to recover to be economically worthwhile pursuing) which led to a fully-fledged gold rush.

    As the news spread, the male population of New South Wales rushed towards the diggings. A Sydney newspaper reported that, “A complete mental madness appears to have been seized by almost every member of the community”. There were fifty thousand people digging for gold in New South Wales within six months, and gold was also found in Victoria at Warrandyte, Ballarat and Bendigo. In 1852 alone 370,000 immigrants arrived in Australia for the gold rushes and the economy of the nation boomed. Let there be no doubt that mankind's obsession with gold was as passionate as ever!

    Not only was the gold rush transformative for Australia as a whole - turning a penal colony into a flourishing nation - it was a personal transformation for those lucky enough to find gold, turning rough workmen into uppity gentlemen. It was observed that, “It is not what you were, but what you are that is the criterion”. Miners declared that, “We be the aristocracy now and the aristocracy be we”. And with a quarter of Britain's male population clamouring for tickets to Australia, it spelt the end of forced convict exile to the continent: as the Governor-General admitted, “Few English criminals... would not regard a free passage to the goldfields... as a great boon”. It’s funny to think I have gold to thank for the nation I live in and am proud to be a part of!

    The South African gold rush was triggered by an Australian prospector, George Harrison, who stumbled across a rocky outcrop of gold-bearing reef in 1886 near the present day city of Johannesburg (apparently while digging stone to help a widowed neighbour build a house). This gold rush, however, had quite a different flavour to that of California and Australia, as South African gold didn’t appear in nugget form and not much showed up as surface outcropping. Rather, gold was found in ore bodies, often quite a way underground, and extracting the gold from the ore with the technology of the time was notoriously inefficient and difficult. Hence capital and companies were required right from the start (though that didn’t stop up to two thousand immigrants a week arriving in South Africa hoping for some piece of the action). Even with the business capital, the gold was so difficult to recover from the ore that mining it was barely economic.

    It wasn't until Allan James arrived on the scene in late 1889, representing a Scottish corporation called the African Gold Extracting Company, that gold mining in South Africa became economically successful. He was pedalling a cyanidation extraction technique (developed by a Glasgow chemist John Stewart MacArthur and a pair of physicians Robert and William Forrest) that turned out to be a huge success: gold production rose from less than a tone in 1886 when George Harrison’s discovery was first made, to fourteen tons in 1889, and then to nearly 120 tons in 1898 before the outbreak of the Boer War.

    The last of the big gold rushes was in 1897 at the Klondike in Canada’s Yukon Territory, though the amount of gold recovered was small compared to the other nineteenth century rushes. Of the one hundred thousand people who set out for Dawson City, less than half actually made it all the way to the gold-bearing areas, and of those only four or so thousand struck it rich (gold is very hard to find - as I well know!). Nevertheless, the rush was as colourful and character-filled as any, immortalised with memoirs, poems and legends.

    One of the most unfortunate aspects of the nineteenth century gold rushes was that the amazing gold nuggets discovered did not survive the gold fever (as with the golden Inca artefacts 300 years earlier). Due to the psychology of the time (a time, incidentally, that saw rare bird collecting - actually hunting down rare or unusual bird specimens and shooting and stuffing them for display - as not only acceptable, but as a respected pastime for well-to-do gentlemen) no intrinsic value was given to the rare geological golden specimens being unearthed - it was the melting pot for everything. And some truly monster nuggets, that would be priceless today, were broken up and melted down. We know of them from records of the time. The world’s largest recorded nugget is the Welcome Stranger, weighing in at around 2300 troy ounces. It was found 5 February 1869 near Dunolly in Victoria, Australia (apparently only three centimetres below surface in the roots of a stringybark tree). It was broken up within a day or two to be weighed at the town bank.

    The biggest single mass of gold ever recorded (not technically a nugget, but rather gold distributed within a matrix) was the Beyers and Holtermann Specimen, found in an underground mine operation on 19 October 1872, near Hill End in New South Wales, Australia (the area Hargraves found twenty-two years earlier). It contained an estimated 3000 troy ounces of gold, and was crushed with other mine ore to recover the gold.

    The largest surviving nugget in the world is the Hand of Faith, weighing 875 troy ounces (27.21kg). It was found on 26 September 1980 with a metal detector about a foot below the surface, near Kingower in Victoria, Australia. Despite concerted efforts to keep it within Australia, the nugget was sold to (and is still on public display at) the Golden Nugget Casino in Las Vegas, USA.

Posing with the Welcome Stranger, February 1869. Credit: public domain.

The Beyers and Holtermann Specimen, October 1872. Credit: public domain.

On display in Las Vegas, the Hand of Faith is the largest nugget to have survived intact. It measures almost half a meter in length (47cm×20cm×9cm). Credit: public domain.

    But nuggets or no nuggets, by the end of the nineteenth century gold rushes (little more than half a dozen decades) the world had significantly more gold in its hands, and due to the stability and economic growth of the times the financial system didn’t break under the weight of all that gold but flourished instead. And as with the individual prospectors of the rushes - some rising to greatness and others going bust - so it was with gold and silver as they approached a final showdown that perhaps had been inevitable since King Croesus and his bimetallic currency.

    Unfortunately for silver, the new gold discoveries of the nineteenth century weren’t accompanied by any major silver discoveries. This was unlike the gold discoveries of the 1500s which were accompanied by significant new supplies of silver in both Peru and Mexico, so that silver continued to be the primary form of money in commonplace use in Europe and America until well into the nineteenth century. Also unfortunately for silver, it just didn’t possess the glamour of gold, which has always driven men to distraction. It even tarnishes. And it’s greater bulk relative to value meant that it cost more to ship a given value of silver compared to a given value of gold, in effect acting as a tax against it in international transactions. A seed was set for silver’s eventual downfall in Isaac Newton's time in 1717, and again one hundred years later when Britain's parliament established the official gold standard, but it was the deluge of new gold supplies in the late 1800s that finally established gold's dominance over silver in the world's monetary system. By 1900 the gold standard had been adopted almost everywhere, and in many countries silver was demonetised (ceased to be acceptable as money).

    Thus it was (due as much to luck, politics, geography, and the laws of physics than any conscious intention) that the world came together under the gold standard for a period of about fifty years, from the end of the American Civil War to the outbreak of World War I. This was also a period of relative peace, stability and economic growth. It was common thought at the time that the international gold standard was responsible for the experienced stability and prosperity, and still to this day the time is often remembered as a lost ideal. However hindsight may tell us that in actual fact the international gold standard was simply a symptom of that era of stability and prosperity, rather than its cause. Either way, it was a time when gold’s grip on human affairs was never as tight, nor the worship of gold by financiers and policy makers so complete. The stacks of gleaming gold bricks in the vaults of banks took on the utmost of importance, such that all other affairs of state were subjugated to the size of those stacks.

    The basic tenant of the international gold standard was that gold, and gold alone, was the ultimate form of money, the standard. A country on the gold standard defined its money (pound, dollar, etc) in terms of a specified and unchanging quantity of gold. The authorities were expected to maintain full and free convertibility of its banknotes and bank deposits into gold at that fixed ratio at any time, no matter what. This meant that there was a more or less invariable rate of exchange between any two currencies, with only minimal fluctuations that were determined primarily by the costs incurred in shipping gold across the Atlantic, for example, between London and New York.


    The advantages to a country adhering to the gold standard was having a currency that was universally acceptable, because it was backed by gold which was universally acceptable (this being the same virtue of gold that made Croesus's staters so acceptable in trade beyond his borders way back in 650 BC). Trade could flourish and investor confidence could be high. The disadvantage was the damaging loss of credibility that would afflict a nation that mismanaged its affairs or was caught in an economic crisis such that they could no longer maintain convertibility of their currency into gold. In that case investors, traders, and speculators, both from within the nation and without, would rush to redeem their paper and bank deposits for gold, depleting the country's precious stockpile sometimes disastrously quickly and to the further detriment of that nation's entire financial stability.

    The success of the gold standard depended on the unquestioning belief and adherence of participating countries that monetary gold parity and convertibility was paramount. All other policy, including domestic growth and employment, was dominated by the overriding gold policy. Member countries even cooperated when one was in trouble, to help the flailing country and hence help maintain the system.

    World War I, however, changed the world dramatically. Over fifteen million people were killed, including 1.8 million Russians, 1.4 million Frenchmen, and a third of the German male population aged 19 to 22. In north-eastern France more than half the roads, hundreds of bridges and thousands of factories were destroyed. The national debts of many nations had swelled by many multiples of their pre-war levels. The Allies ended up in debt to the United States to the tune of nearly $2 billion, while France, Italy, and Russia each owed the United Kingdom some $500 million. These were huge sums indeed for the time.

    There was a great desire to return to the gold standard after WWI, as the gold standard was seen to be the reason for the successful financial structure before the war, but unfortunately the decisions made doggedly pursuing this goal turned out to be the wrong ones, creating worldwide financial disaster.

    The Cunliffe Committee report in Britain, commissioned to propose appropriate policies for the postwar transition, was a good example of what a good idea (almost) everyone thought it would be to return to the gold standard. It spoke of “the machinery which long experience has shown to be the only effective remedy for an adverse balance of trade and an undue growth of credit”, and recommended that “it is imperative that after the war the conditions necessary for the maintenance of an effective gold standard should be restored without delay”, and assured that the committee members were “glad to find there was no difference of opinion among the witnesses who appeared before us as to the vital importance of these matters”. There was one outspoken critic though, an economist by the name of John Maynard Keynes. He was mostly ignored... for the time being at any rate...

    In hindsight, the Cunliffe Committee report didn’t take into account how greatly the world had changed due to the war. Political alliances, as well as national finances and debts, amongst many other things, had altered drastically. Many of the conditions which had existed before the war to nurture the success of the international gold standard had been torn to shreds. International relations were now tainted with recriminations and bitterness, rather than the spirit of cooperation that had existed previously. The French, who had sustained the majority of physical damage of the war, were insisting on unrealistically harsh payments of reparations from the Germans, and wouldn’t repay their debts to the British (whose land was unharmed) until the Germans paid up. The British, who had lost many men and liquidated much of their overseas wealth in the war effort, were unwilling to pay back their debt to the Americans (who had emerged from the war with only minor casualties and a strong economy) until the French paid up. The resulting tension interfered with the re-implementation of an international gold standard at crucial steps along the way.

    Britain, who had led the world in the banking and finance sector for hundreds of years, and whose pound sterling was considered indomitable, mandated via parliament a full return to the gold standard in Britain by the end of 1925. The main obstacle to going back to gold, as was the case when convertibility was re-introduced a hundred years earlier after a lapse, was an inflated price level, though this time the gap was much wider. Adding to the problem was a growing governmental budget deficit, as well as ageing industrial production infrastructure (once the best in the world, but now falling behind with production costs out of line with new European and American competition, with a resultant detrimental effect on trade balance).

    This meant that if Britain reverted to gold at what had come to be the expected value declared in Isaac Newton's time (which worked out to US$4.86 per pound sterling before the war), that US$4.86 was not going to buy anywhere near as much in postwar Britain as it had previously. This, together with the current adverse trends in the balance of trade, might create overwhelming pressure on the gold stock. On the other hand, if some lesser value were chosen for the pound, the trade balance would be helped, but at the cost of the pound losing crucial international credibility.

    The Governor of the Bank of England at the time, Montagu Norman, who was in the position for a record 24 years, was convinced he could get the pound back to US$4.86 with an acceptable amount of domestic pain in the form of high interest rates, subdued business activity, and higher unemployment. It was the common thinking of the time that domestic pain must be endured for the sake of the perceived benefits of being on the gold standard, and according to Norman, the human pain was a matter for the government to worry about (if that), not the Bank of England, whose primary responsibility was to add to their collection of gold bricks and protect the reputation of the pound.

    The difficult decision fell to none other than Winston Churchill, who was Chancellor of the Exchequer at the time. Though the decision pained him, the bulk of opinion from his advisors, including Montagu Norman, was that a return to the gold standard must happen, and at US$4.86. Churchill went before Parliament and declared that “If the English pound is not to be the standard which everyone knows and can trust... the business not only of the British Empire but of Europe as well might have to be transacted in dollars instead of pounds sterling. I think that would be a great misfortune”.

    And so the Gold Standard Act of 1925 was passed. Some of the arrangements were different to previously: the right to bring gold to the bank for minting into coin was abolished, however the Bank of England would continue to sell gold on demand in the form of four hundred ounce bars (which weighed a little over 15kg). Keynes, as insightful as ever (though admittedly looking back with five years hindsight from 1930) observed that:

    “[Gold] no longer passes from hand to hand, and the touch of the metal has been taken away from men's greedy palms. The little household gods, who dwelt in purses and stockings and tin boxes, have been swallowed by a single golden image in each country, which lives underground and is not seen. Gold is out of sight - gone back again into the soil. But when gods are no longer seen in a yellow panoply walking the earth, we begin to rationalise them; and it is not long before there is nothing left.

    What a wonderful quote. I find myself feeling quite grateful that I'm one of the relatively few that still do get to experience this ‘god’ in my hand. If you’d like to join that privileged band, feel free to visit the Nugget Gallery.

    Keynes had also pointed out, a few months before the new Gold Standard Act was passed, that the price disparity between Britain and the overseas competition, together with the not insignificant unemployment in Britain, meant that a return to gold could be dangerous because it would put Britain at the mercy of the US Federal Reserve. He pointed out that the US gold stock was six times the size of Britain's, which meant that Americans could absorb swings up and down in their gold stock that would ricochet back onto Britain with six times the impact. Also, Britain was now in debt to the United States, whereas previously it had been one of America’s largest creditors. Keynes’s perceptive argument was not an immediate problem, due to US economic conditions and policy being currently favourable. In time, however, Keynes's warning would ring all too true.

    In the meantime, however, the first problems in the wake of the passing of the Gold Standard Act of 1925 showed themselves in the coal mining industry, whose costs had become too high to be competitive in export markets. Fallout from the resultant workers' pay cut ultimatum by the industry escalated into the General Strike of 1926. Blame was laid on Churchill and the gold standard decision for the situation.

    Keynes, of course, was outspoken in the outcry, but gave Churchill no credit for having explored the issues with his experts as fully as possible. Three months before the decision Churchill had even gone as far as circulating amongst his experts a memorandum (referred to in the Treasury files as ‘Mr. Churchill's Exercise’) that explored objections, such as those Keynes had been making, against making the move back to gold. It included hypotheticals such as “A Gold Reserve and the Gold Standard are in fact survivals of rudimentary and transitional stages in the evolution of finance and credit” and even a radical suggestion to forget about restoring the gold standard and instead ship 100 million pounds of gold to New York to pay war debts, thereby provoking inflation in America and leading to a significant improvement in the exchange value of the pound. However Churchill's experts countered each of the objections with strong arguments of their own, convincing Churchill to proceed as planned.

    The French returned to a gold standard as well, but a large gap between government spending (including post-war reconstruction) and national exports (due to a depressed post-war economy) led the French Treasury into trouble and needing to be bailed out by private sector loans. After many ups and downs in the franc, they managed a de facto gold standard by 1927. Furthermore, they settled on a value that was irresistible to foreign investors - at the expense of the British and Americans. Capital poured back into France, such that the Bank of France's gold holdings went from more or less equal to the Bank of England's gold reserve in 1926 to five times its size in 1931.

    The growing financial tension between London and Paris was aggravated further from the time of the appointment of Emile Moreau to the Presidency of the Bank of France in 1926. Emile and Montagu Norman came from different backgrounds and philosophies and did not get along one little bit, only adding to the pain of international relations in the wake of the war.

    A roaring stock market boom in the US between 1925 and 1929 led to a peak in September 1929, followed by the Great Crash in October and the resultant Great Depression. The immediate response to the crash was to jump back into the mindset of holding gold as the most important thing, hence policy was aimed at protecting gold reserves. This meant increasing interest rates, by a lot if necessary, and accepting the resultant domestic unemployment and other problems. Any other strategy was thought to lead to the unacceptable result of loss of gold to other nations. Though the distressed British economy was there for all to see, the fear in the wake of the crash - rising unemployment, business and bank failures - had nations grasping at the only strategy they were familiar with.

    The US stock market crash in 1929 led to a domino effect in 1930 with the failure of the Tennessee bank Caldwell & Co. Many industrial companies, insurance companies, and banks followed suit. International disaster came when the failure of Austria's largest bank, the Creditanstalt Bank in Vienna, led to a run on banks throughout Europe for cash and gold. This European crisis rapidly affected the pound, such that Britain suffered heavy losses of gold and withdrawals of foreign-owned sterling balances. The pound slid, helped along by ever increasing concerns regarding the widening deficit in Britain's balance of trade, and the nation’s gold stocks continued to bleed from The Bank of England’s vaults to overseas destinations.

    The government - and everyone else - desperately tried tightening belts to deal with the crisis, a strategy that Keynes spoke out against: “Suppose we were to stop spending our incomes altogether and were to save the lot,” he posed in a January 1931 radio broadcast. “Why, everyone would be out of work... Therefore, oh patriotic housewives, sally out tomorrow early into the streets and go to the wonderful sales which are everywhere advertised. You will do yourselves good - for never were things so cheap... And have the added joy that you are increasing employment [and] adding to the wealth of the country because you are setting on foot useful activities”. This is of course exactly the course of action we were all encouraged to take in the more recent Global Financial Crisis of 2007-2009, but Keynes's message at the time fell on deaf ears. A Budget and Economy Bill was passed, providing for a 70 million pound reduction in government spending and a tax increase of 86 million pounds. Keynes was outraged, but the government was convinced that defending the sterling (and its backing of gold stock) was imperative, regardless of the human cost it caused, and hence raised interest rates from 2.5% to 6%. It turned out that this combination of higher taxes, reduced spending, and higher interest rates was disastrous. Also, a small contingent of British sailors had the short-sightedness to go on strike against the pay cuts that were part of the proposed legislation, receiving international attention (probably more than it deserved) and undermining confidence even further: 40 million pounds of gold flowed from the Bank's vaults in the space of one week. In fact, 200 million in gold had been lost since the middle of the year, and by the third week of September it was all over: the Bank of England asked the government to relieve it of the obligation to provide gold bullion on demand. After only six years of it being reinstated, Britain was off the gold standard.

   No longer convertible into gold, the pound immediately tumbled in foreign exchange markets. In fact, central bankers around the world shied away from holding their reserves in any foreign currency, even the dollar - there was to be no substitute for gold. Within days of the British suspending convertibility, twenty-four of the forty-seven nations on the gold standard followed suit, hence protecting their gold stocks by making them inactive. (A year later, only the United States, France, Switzerland, Holland, and Belgium remained on the gold standard, and six years later no country permitted their citizens to convert currency or bank deposits into gold, though the US ‘gold window’ was still open until 1971 through their fixed price standing offer on purchases of gold - something we shall come to shortly).

    The general run to gold in the wake of the British action hit the US hard, despite its strong gold standing of $4.5 billion (which amounted to 40% of all gold reserves around the world). In the space of a month $755 million in gold flowed out of the United States (nearly half to France and the remainder mainly to Belgium, Switzerland, and the Netherlands). This led to Americans panicking, making large withdrawals of currency and gold coin to hoard and causing many more bank failures.

    By 1932 the US was experiencing a replay of the British 1931 crisis with runaway deficit looming, and attempting the same remedy as the British of reduced government spending and higher interest rates and taxes. Unemployment was soon over 20%.

    The November 1932 election, where Roosevelt defeated Hoover, was followed by months of uncertainty before the 4 March inauguration (rather than 20 January these days). Hoover’s opinion on the importance of gold was clear: “Ever since the storm began in Europe, the United States has held staunchly to the gold standard... We have... maintained the one Gibraltar of stability in the world and contributed to checking the movement of chaos... [A] mass of gold dashing hither and yon from one nation to another, seeking maximum safety, has acted like a cannon loose on the deck of the world in a storm... Confidence cannot be reestablished by the abandonment of gold as a standard in the world”. However, Hoover was a ‘lame-duck’ president, and Roosevelt insisted on waiting until he was in power before making his plans clear.

    The uncertainty this created led to rumours that the incoming administration planned to interfere with the nation’s currency, which in January 1933 prompted thirty prominent economists to express their concern, stating “The gold standard of present weight and fineness should be unflinchingly maintained... agitation and experiments would impair confidence and retard recovery”. Despite all that had occurred overseas, belief in the gold standard was still alive and well.

    As the inauguration drew closer, fear increased. Another run on the US gold stock saw $160 million leaving for overseas in February 1933 and another $160 million gone in the first days of March before the inauguration.

    Calm was restored somewhat right after the inauguration, with the new Secretary of the Treasury giving an assurance that the gold standard was inviolate, and Roosevelt himself declaring at his first press conference that the gold standard was safe. But contrary to those indications, things were indeed afoot, first taking shape in the form of an Emergency Banking Act which Roosevelt pushed through Congress in March and which led, on 5 April, to the now infamous Executive Order 6102 (sometimes referred to as the Gold Confiscation Executive Order) that forbid “the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates” by US citizens and required them to deliver all gold coins, certificates and bullion to the banks in exchange for paper currency or bank deposits at the rate of US$20.67 per troy ounce, and for the banks to deliver the gold to the Federal Reserve. Later in April more legislation was passed giving the President the power to reduce the gold content of the dollar. This caused Lewis Douglas, Director of the Budget, to predict that “This is the end of Western civilisation”. Even further legislation in June provided that any clause in any contract requiring payment in gold was now abrogated - even including obligations of the US government. This led to a spate of law suits.

    Then on 3 July, Roosevelt issued a statement (known as the “bombshell message”) declaring that efforts to stabilise exchange rates by going back to rigid relationships to gold were “old fetishes of so-called international bankers” and that exchange rate stability was “a specious fallacy”. There was an outcry from experts across the board, except of course Keynes. From that point the dollar varied day to day in the foreign exchange markets as the Secretary of the Treasury, under Roosevelt's orders, gradually reduced the amount of gold a dollar could purchase. Even Keynes was concerned with the resultant movements in the dollar - “like a gold standard on the booze” he asserted.

    This adjustment of the gold to dollar rate ended on 30 January 1934 with an executive order fixing the price of gold at US$35.00 an ounce, 69 percent greater than the old value. (This was the price that lasted till the final closing of the gold window in 1971. It’s also worth noting that, although a multitude of complex factors were at work, between 1933 and 1937 many US domestic indicators improved, including unemployment falling from 25 to 14 percent and industrial production rising 60 percent.)

    As each currency broke away from gold and was devalued, the price of gold went up. At the same time the prices of goods and services were doing the opposite - falling significantly. This meant that an ounce of gold in the mid-1930s could buy twice as much as in 1929. This made gold production a lucrative activity and production soared: two million tons were produced worldwide in 1932, and in 1938 that was up another 50 percent. Worldwide gold reserves in central banks and related government funds jumped from about 40 million tons in 1929 to 60 million tons ten years later. Worldwide monetary gold increased so much that by 1939 there was enough to replace all ordinary currency with gold coin.

    Much of this new gold found its way to New York where the United States stood ready to buy everything at US$35 an ounce. This mass migration of gold to the US occurred for two main reasons. Firstly, with gold production so high people wondered whether the price of gold might fall soon, in which case best to sell as much as possible to the US at US$35 an ounce while the opportunity was there. Secondly, the threatening political climate in Europe at the time, with Hitler, Mussolini and the emperor of Japan making noises, made shipping gold capital to the safety of America seem like good sense. By the time WWII broke out, 60 percent of the world's monetary gold was in the United States (compared with 38 percent in 1929 and 23 percent in 1913).

    The world emerged from WWII having seen more destruction than ever before in its history, and with many countries with worthless currencies and non-intact governments. A restructuring of the world’s financial system was undertaken, the scope and character of which was quite different to the restructuring after WWI (due to, as Keynes put it, “In 1918, most people's only idea was to get back to pre-1914. No one today feels like that about 1939”). There was much more international cooperation, efforts to help bring defeated Germany, Italy and Japan into mainstream democratic society, and the founding of the United Nations. The new international economic system was worked out by 730 delegates from fourty-four countries who gathered in Bretton Woods, New Hampshire, in 1944. Most of the final design came from Harry White of the US Treasury Department and the ever-present John Maynard Keynes of Britain, with Harry White believed to have more input than Keynes to the final draft.

    The Bretten Woods agreement saw the removal of a nation’s vulnerability to its gold stock, with the US dollar the new lynchpin of the structure. The United States, now with the majority of the world's gold stock, would be the only nation with a currency freely convertible into gold at a fixed rate (the convertibility privilege limited to national treasuries and central banks, not private parties). This rate was set at US$35 per ounce, and the rest of the world defined their currencies in terms of the US dollar instead of gold. In order for the system not to imprison nations to the dollar as rigidly as to gold previously, provisions were made so that relationships between the dollar and other currencies, known as legal par values, which were expected to be fixed under normal circumstances, could be changed when a country ran into problems that were deemed more likely permanent than temporary. Another step that was taken to ensure that the new system would avoid the detrimental domestic effects seen as a result of strict adherence to the old gold standard, was the creation of the IMF (International Monetary Fund) as a lender to tide a nation over when trouble was expected to be more temporary in nature. Gold was still very much in the picture of this new scheme, as the IMF resources contributed by each member nation were to consist of 75% the nation's currency and 25% gold.

    The new system, whether better than the old gold standard system or not, didn't last too long. An underlying assumption was that the dollar would continue to be as good as gold, and therefore always acceptable. But of course, things change. In fact, part of the aim of the scheme was to help Europe and Japan get back on their feet, so change was actually inevitable. Not only were new European and Japanese industries competing with American industries, but they were also attractive areas for American investment, meaning an outflow of capital. This outflow of capital turned out to be significant, and together with a high level of international economic assistance given by the US, as well as military spending, brought America to a position none foresaw. The impact was seen in the US monetary gold stock: after holding steady at around $22 billion from 1950 to 1958, it shrank by over $3 billion between the end of 1958 and the end of 1960.

    Concern began to develop in the media regarding American foreign liabilities increasing above the ability of the gold stock to potentially cover them, though this was really to be expected as gold stock flows reestablished after the unusual gold build up in the US in the lead up to WWII. Concern was even more unwarranted as the US financial structure was firm, and holding on to US dollars earned interest, whereas gold didn't (and also incurs storage costs). In effect the United States served as a bank for the rest of the world, similar to the role Britain played prior to WWI. Only inflation would have been a legitimate concern, and that began rearing its head, though not too badly, at the end of the 1950s. It was bought under control, but started up more seriously in the second half of the 1960s, one factor of which being the Vietnam War. The US economy began to wear and its gold stock to decline, falling from $19 billion to $10 billion between 1958 and 1971.

    The major financial powers were concerned that the resultant accumulation of gold by speculators (known as ‘gold bugs’ during this time) could push the price of gold above the official US$35 an ounce and spark a rush into gold that could topple the whole system. So in 1961 the United States, Great Britain, France, Germany, Italy, Switzerland, Holland and Belgium joined together to pool their resources to beat down the speculators: they sold gold to the market whenever the price began to move more than a few cents above US$35, so as to keep the price stable. The struggle became increasingly one-sided in favour of the speculators, especially after the French President, Charles de Gaulle, began beating his drums in 1965 about returning to a gold standard, and pulled France out of the gold pool in 1967. In fact de Gaulle demanded a return to the gold standard, insisting “There can be no other criterion, no other standard, than gold - gold that never changes, that can be shaped into ingots, bars, coins, that has no nationality, and that is eternally and universally accepted as the unalterable fiduciary value par excellence,” and going on to say “The kind of transcending value attributed to the dollar has lost its initial foundation, which was possession by America of the greatest part of the world's gold”. And indeed his words came at a time when the US stock of monetary gold had fallen to its lowest level since March 1937.

    Despite their declining gold stock the United States continued to participate in the gold pool, and in March 1968 had to transfer $950 million in gold to London to keep the gold price close to US$35 (nearly $2.5 billion had been paid out by the US since November 1967). But on 17 March 1968, after seven years of pouring their gold into the hands of the gold bugs, the gold pool disbanded, announcing they would no longer buy or sell gold in the marketplace. Official transactions in gold between central banks would continue at US$35 an ounce, and central banks could still buy gold from the US for dollars at that price, but from that point on the price of gold in the free market would be left to private parties to determine.

    Fuelled by speculation of an ultimate devaluation of the US dollar, the gold price went up to US$41 an ounce within a month of the gold pool's demise. From there it didn’t take long for an interesting situation to show itself: it was possible for the central banks, former members of the pool, to cash in their US dollars at the Federal Reserve for gold at US$35 an ounce, then sell that gold on the market for considerably greater than that amount (now up to US$43). The solution came in the form of an 'informal handshake', whereby European members of the former pool agreed to refrain from converting dollars into gold at least for the remainder of the Vietnam War, in return for which the Americans were expected to increase interest rates and control their budget to help deal with the underlying causes of the problem.

    The rising inflation of the decade, plus the closing down of the gold pool, was the beginning of the end for gold as a monetary standard. With control over the price of gold in the marketplace given up by authorities, and inflation surging ahead, the gold-based Bretton Woods system of fixed exchange rates became a stranglehold on politicians trying to finance rising costs of government. The response from the public was renewed interest in gold as a safe haven.

    In an attempt to control the spiralling inflation, US President Nixon appointed John Connally as Secretary of the Treasury in December 1970 and came up with a two-pronged strategy to tackle the problem. The first element of the strategy was to shut down the US$35 per ounce gold window in order to solve ‘the gold problem’ once and for all. This was a radical step, as convertibility of dollars into gold had been in place for nearly two hundred years (bar the Civil War). Once the dollar had broken away from the golden shackles it would float free in the foreign exchange markets like other currencies. Nixon and Connally hoped this would have the effect of boosting US export business and jobs. The second part of the strategy involved price and wage controls designed to counteract possible inflation caused by the first part of the plan. So in theory the two parts of the strategy would work nicely together.

    The resultant New Economic Policy was launched in August 1971, with words from the President, “I have directed the Secretary of the Treasury to defend the dollar against the speculators... Now the other nations are economically strong, and the time has come for them to bear their fair share of the burden of defending freedom around the world. The time has come for exchange rates to be set straight... There is no longer any need for the United States to compete with one hand behind its back... We are not about to ease up and lose the economic leadership of the world”.

    There was instant turmoil around the world and foreign stock markets took a nosedive. Many governments and nations held large amounts of US dollars, so any fall in the value of the dollar against other currencies was going to take its toll, and in the two weeks after the announcement many stock markets were closed down as authorities wondered what to do, but there was no stopping it - by the end of August the US dollar had been devalued.

    For a while the two-pronged strategy worked relatively well for the US, however a number of crises continued to increase inflationary pressures beyond the ability of Nixon's price and wage control measures to constrain. This included the formation of OPEC (Organisation of Petroleum Producing Exporting Countries) in October 1973 to protect and raise the price of oil, causing inflationary pressure throughout the global economy as a whole.

    A month later, the 1968 informal agreement of the central banks to refrain from gold trading at market prices came to an end. In 1975 the US Treasury declared that “Neither gold nor any other commodity provides a suitable base for monetary arrangements” and auctioned off six percent of its gold stock. Further auctions took place in 1978 and 1979, and the IMF also auctioned off some of its gold stock. Suddenly it seemed as if the central banks didn’t consider gold hoarding as important as they always had. But the marketplace was unaffected by this apparent new view of the central banks, especially considering the increasing inflation eroding the value of other stores of wealth, such as stocks, bonds, and cash. Many speculators were only too happy to buy up the gold from the banks.

    This demand for gold as a safe store of wealth against inflation drove the gold price up and up: from US$46 an ounce at the beginning of 1972 to US$64 by the end of the year, then US$100 in 1973 and up to US$180 by 1977. Another OPEC oil price increase in 1978 sent gold to US$244, which then doubled to US$500 a year later.

    Increasing US and worldwide inflation, together with further increases in the gold price to US$634 in the first two business days of January 1980, gave credence to some feeling that the market was showing that people didn't trust the governments or paper money, to the extent that the central banks even began to start talking about restoring gold to its old role in the monetary system, a reversal of their policy of only a few years earlier when they were selling gold from their reserves. The US Undersecretary of the Treasury went on record saying that, “Gold remains a significant part of the reserves of the central banks available in time of need. This is unlikely to change in the foreseeable future”, followed by the Treasury Secretary announcing there’d be no more gold auctions from the Treasury: “At the moment it doesn't seem an appropriate time to sell our gold”, he admitted. Only half an hour after that statement the gold price jumped to US$715 and was at US$820 two days later. A sort of gold fever caught, with people bringing in their gold bullion, bars, coins and even jewellery to cash in on the amazing price. Unfortunately gold nuggets - those that had thus far been lucky enough to survive the melting pot - were also sacrificed to the cash bonanza.

    The price reached its record high of US$850 an ounce on 21 January 1980, then did an abrupt about face and dropped by US$145 the next day. Five years later gold was down to US$300. Another high of US$486 occurred after the 1987 stock market crash, but by the end of 1997 the price was below US$300 - the bubble had worked itself out.

    The unbelievable golden bull market from US$35 in 1968 to US$850 in 1980, a gain of 30 percent a year, was unprecedented in history. Its cool-off in the 1980s was due to a sense that the awful inflation of the 1970s had finally been brought under control, hence other forms of storing wealth - stocks and bonds and the like - were competitive options to gold.

    As gold again was seen to lose some importance for the purposes of central banking and as a monetary vehicle (as opposed to a store of wealth), some central banks offloaded some of their gold stock, for example the Swiss in 1997 and the British in 1999. But even then the Swiss experts pointed out that, “Many depositors conceive of gold as the only asset that held its value over the millennia” and so kept half their gold, selling the other half in “small steps”. The Swiss National Bank followed that sentiment with the assertion that they were “convinced that gold will continue to play a role as a currency reserve, especially in times of crisis”. The Bank of France 1997 annual report asserted, “Gold remains an element of long-term confidence in the currency... Above all, holding gold is, from the political point of view, a sign of monetary sovereignty [and] an insurance policy against a major breakdown in the international monetary system”. A former managing director of the International Monetary Fund declared that, “Gold remains at the heart of a collective belief in the credibility of an international economy... a sort of 'war chest', indispensable for a tomorrow whose needs we can only guess at”. And the actions of the time matched the words: when the new European Central Bank opened in 1998 to manage Europe's new euro, 15 percent of the bank's reserves were in gold.

    If any offloading was to be done, the central banks agreed to limit it to four hundred tons a year so as not to drive down the gold price by overly flooding the market. This would protect the value of their remaining gold stocks; as the President of the European Central Bank put it, to keep “the value of gold where it is... The purpose of this action is to give certainty to the gold market”.

    The mining companies were also an important player at this point, their livelihood dependant on the health of the gold market. During the 1990s they began to sell more than their current production to avoid having to sell at a lower price later on. The portion of sold gold that they hadn’t produced yet was borrowed from the central banks at a nominal rate of interest and paid off from future production.

    In fact, consumption of gold actually doubled in the 1990s, possibly because its price was falling while everything else was getting more expensive, so that gold was seen as relatively cheap compared to times not long before. Consumption of gold in jewellery and electronics rose 50 percent from the beginning of the 1990s to the end of that decade. Asian consumption of gold continued to be high, with The Economist reporting in 1999 that, “The Indian lust for gold remains unabated... Gold jewellery is the only form of wealth that many women can claim as their own”.

    The 1990s were also the time when gold nuggets finally began to be valued for their uniqueness, rarity and beauty. No longer was the melting pot the most probable fate for a nugget, as had been happening due to the short-sightedness of the late nineteenth and early twentieth centuries as well as the gold price cash grab of the late 1970s and early 1980s. In fact, the opposite began to occur: gold nuggets began to fetch a far greater price than the spot value (market value) of normal processed gold (normal processed gold sometimes being referred to as ‘junk gold’), with good specimens often fetching as much as double the day’s gold price or more (a trend which continues today). In 1999 the Perth Mint was far-sighted enough to embark on a drive to increase its stock of nuggets in certain size categories, offering prospectors Australia-wide a high price. They now have one of the best gold nugget collections you’re ever likely to see, with a value far greater than melting pot value.

    And so the magnificence of gold journeys with us into a new century. It’s continued importance as a store of wealth, especially during times of uncertainty, is undeniable: gold cracked the magic US$1000 per ounce mark in the wake of the 2007-2009 Global Financial Crisis for exactly that reason. Only one of its former roles - that of a strict monetary standard - seems to be outrun by the complexity of today’s financial systems. The world's currencies are now directly convertible to each other, and keeping the financial system running is left to discretionary management (despite the problems with that in times past). The US dollar happens to be the current kingpin tying the system together across international borders, but it would probably be naive to believe that this will last forever.

    Whereas the monetary role of gold may have declined, the various other uses mankind has found for its favourite metal is astounding. Due to the fact gold is ductile, does not corrode and is a good conductor of electricity, it is widely used in electronics. It can be found in computers, televisions, mobile phones and the like. And as gold does not corrode, even in sea water, it is often used for undersea cables. In medicine, injectable gold has been found to help reduce the pain and swelling of rheumatoid arthritis and tuberculosis. Gold can also be used in precision delivery of medication to fight cancers. In dentistry, gold alloys are used for tooth restorations, such as crowns and permanent bridges, as gold’s malleability creates a better mating surface with other teeth than does porcelain. Suspensions of gold nanoparticles are used in research applications in medicine, biology and materials science. Gold flakes and gold dust are used in many food and drink recipes, both old and new. We’ve even sent our beloved gold into space - many satellites contain gold circuitry and have gold reflective sheets. The visors of astronauts’ helmets often have a thin coating of gold to protect from the brightness of the sun. So our 6000 year journey with gold that we’ve just explored will undoubtedly continue: if or when mankind migrates beyond our solar system, gold is bound to journey with us still.

    I enjoy the fact that I am part of this history in some very small way: a lowly prospector, coming three generations after the real action, but still searching the bush in the very tail end of one of the best and most productive gold strikes the world has ever known, and wishing to share my finds with others. You, the reader of this page, now know more about gold than most people on the planet... except perhaps what it feels like to hold it. If you’ve had the interest and dedication to get through this page, I have no doubt you’ll enjoy a purchase from the Nugget Gallery immensely, and I’d be glad for one of my hard-won nuggets to end up with such a person - enjoy!