Gold as a Currency

Gold as a Currency

The history of gold as a currency is interesting. In about 700 BC gold was first made into coins.It had been used many times before that as a symbol of wealth and devotion in worship, and this greatly enhanced its ability to be used as a currency or monetary unit. Prior to this, gold had to be weighed and checked for levels of purity before it could be used in trading.

 

After the introduction of gold coins, it was widely used as currency until the 18th century when paper money began to take over in Europe. At this point, as in most cases when the old yields to the new, there was a major struggle for dominance between the paper currency and gold. This eventually was resolved by the creation of the gold standard.

 

What the Gold Standard Did

With the gold standard, gold backs the value of the paper money. As societies were changing from gold as a currency to paper money as a currency some problems began. This standard allowed paper money to be freely converted into fixed amounts of gold. It was adopted because too much credit was being generated by the paper money being produced. The gold standard created controls on money that ended in stability. The gold standard allowed countries to use what is now referred to as fiat currencies to stabilize the currency markets and the economies. As the markets got bigger and bigger and economies grew, the gold standard became more difficult to maintain. It is no longer in effect in the US or anywhere else in the world, meaning that currently gold is not used as a currency.

 

Will Gold Ever Be Used As A Currency Again?

Could we see gold as a currency again? In the case of an economic collapse across the world it is likely that gold will once again be considered the best currency available. It is tangible and easily recognized across cultures and governments. In addition, it has a long history of being valued as a currency. It could very well rise again.

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