A History of Gold Investment

History of Gold Investment

Gold has been highly valued for its unique and attractive properties since as far back as 4000 BC. The oldest gold treasure in the world dates from 4,600 BC to 4,200 BC and was discovered at a Bulgarian burial site in Varna.

Gold usage throughout history

Throughout history, gold has often been used as a tool for bartering or trading.

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It was first used as a form of currency back in 500 BC, when Darius the Great, ruler of the Persian Empire, minted the very first gold coin, known as the “daric,” in order to help fund the expansion of his army into foreign territories. Up until the last century, many countries around the world used gold and silver coins as a form of currency. It wasn’t until the 1930’s during the worldwide depression, that countries ceased to use the gold standard.

After the war

After the second world war, the US dollar became the main currency to hold by other governments as it was the only currency still backed by gold. This continued up until 1973 when America became the last country to cease using the gold standard. The reason for this was that the country required additional funds to pay for the Vietnam war.

History of Gold Investment
Daric Gold Coin

Gold as an investment

Gold purchased as an investment really only took off after 1970’s when The United States once again made it legal to own and trade in physical gold. Up until 1975, the Gold Reserve Act Of 1934 had made the possession of gold illegal.

Gold is a popular investment among a diverse range of investors who wish to diversify their portfolio outside of traditional stocks and shares and in doing so reduce their risk. Over a long period of time gold has consistently held its value against other asset classes and in the last 45 years has been shown to have outperformed stocks and shares.

What’s the deal today?

Today gold is typically purchased as a hedge against inflation and its price has often been known to rise during times of economic crisis. The main reason for this is that during times of economic uncertainty, people often turn to tangible assets in which to store their wealth in case of a market crash. A great example of this occurred after the 2009 financial crisis when the price of gold rose to its highest peak in history.

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Due to ever increasing geopolitical tensions and a growing mistrust of the current financial system, the popularity of gold investments has grown significantly in the past two decades. As Britain moves towards an uncertain future outside of the European Union, it is likely that investor demand for physical gold will continue to increase.

Introduction of the Krugerrand

The South African Krugerrand, launched in 1967, was the very first coin designed specifically for investment purposes. At the time South Africa were the biggest gold producers in the world and the Krugerrand was the perfect way to capitalize on this. For the very first time it offered investors a vehicle for the private ownership of gold and at one time the Krugerrand accounted for nearly 90% of the global gold coin market. Since its inception, many other countries have introduced their own version of the Krugerrand including Britain’s very own Britannia coin.

History of Gold Investment
1 oz Gold Krugerrand

Influence of the World Gold Council

The World Gold Council has been instrumental in changing the way people perceive gold as both an investment and commodity. Founded in 1878, the WGC has helped to promote demand for gold all over the world. Today the WGC continues to have considerable influence on the gold investment market and launched the very first gold ETF in 2004.  For more information on the World Gold Council, you can read our article on them here.

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Popular forms of Gold Investment

Gold is one of the most versatile assets available on the market and there are many different types of gold investments. Some of the most popular of which include:

Collectors’ Coins

Collector’s coins are popular with a wide variety of investors as they offer numismatic value as well as just their material value. If you have access to expert advice, or even if you have sufficient knowledge in this area yourself, then historic collectors’ coins can provide excellent returns.

Gold Bullion Coins

Gold bullion coins are usually issued by countries or commercial businesses. Popular examples include the Britannia, the South African Kruggerand and the American gold eagle. These coins are generally for investment purposes only and are priced based on the weight and purity of the gold content that’s been used.

Gold Bullion Bars

Gold bars are one of the easiest ways to invest in solid gold.

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You can buy them in weights of one gram, one ounce, ten ounces, and one kilo. They typically have a purity rating of 999.9.

Gold ETF’s

Gold ETFs have been around for less than 15 years, however, since the launch of the very first gold ETF back in 2004 they have become one of the most popular forms of gold investment, allowing investors to profit from changes in the price of gold without having to own any physical gold themselves.

Gold Mining Company Stocks

Some of the hottest stocks right now are issued by gold mining and exploration companies. Part ownership in these companies is becoming an increasingly common investment.

Gold investment through Physical Gold

Physical Gold offers a wide range of gold based investments including vat free gold bars, tax-free coins and much much more. To speak to one of our experienced brokers or to find out more information on any of our product ranges please contact us on 020 7060 9992.

Image sources: Flickr & Wikipedia


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