Brief History of Gold
Gold has been used for thousands of years. Gold trading was carried out throughout centuries and many countries used gold as a currency.
The first use of gold coins is recorded in Lydia in Asia Minor around 600 B.C. The Chu State circulated square gold coins in around 5th century BC. Gold artifacts like golden hats have been found in Central Europe dating back to 2nd millennium BC (the Bronze Age). Gold artifacts from the Levant and from around 4th millennium B.C. have also been found.
Egyptian hieroglyphs describe gold as being “more plentiful than dirt” in Egypt in around 2600 BC, and records indicate that Egypt was an important gold mining and production center throughout history.
Gold is also mentioned frequently in the Old Testament.
Romans discovered and used many new methods for extracting gold on a large scale from 25 BC onwards. Medieval European nobility used gold flakes to decorate foods and drinks, believing that gold was rare and beautiful, and hence must be good for health as well.
Through much of history, gold has been valued, prized and sought after as a precious commodity, across cultures and countries. During the 9th century, there were gold rushes whenever a large deposit of gold was discovered.
In fact, much later, the Europeans explored Americas partially because of the gold ornaments worn by Native Americans.
Gold began to be used to back up fiat money in 1792, when the U.S. pegged the dollar to a gold standard.The U.S. used a bimetallic standard from 1792- 1971, and backed all paper currency by gold. In 1971, the U.S. ended the gold standard, and gold prices were severely affected.
The Reed Gold Mine experienced a rush in North Caroline in 1803. Other gold rushes took place in California, Colorado, New Zealand and Canada.
European countries too began using gold coins in around the 14th century.
Gold certificates and bills based on gold coins began to spread in the 19th century to finance industrial operations. In the run up to World War I, many countries converted to a fractional gold standard, so that they could finance the war. After the war, many countries like Britain gradually replenished their gold stores, but there was still an embargo on the international flow of gold, even via bills of exchange.
After World War II however, gold was replaced by currencies, under the Bretton Woods system. Many countries abandoned the gold standard and the ability to convert currencies to gold. In 1971, the U.S. refused to convert its dollars into gold.
Instead today, Fiat currency is used widely. Switzerland was the last country to hold on to gold conversion until 1999, when the country joined the International Monetary Fund and gave up on backing 40% of its value by gold.
Where is Gold Produced?
Gold is mined in all continents except Antarctica. Almost all the gold that has been mined in the world is still existing since gold is nearly indestructible. According to GFMS, up till 2012, around 174,100 tons of gold had been mined in human history. The world’s stock of gold grows only by 1 to 2% every year.
Gold is a global industry, with over 90 countries producing gold around the world.
But according to the World Gold Council, the world’s top 20 gold producing countries produce more than 75% of the world’s gold. China, South Africa, the U.S., Australia, Canada, Indonesia and Russia are the major gold producers around the world.
Historically, South Africa has been responsible for a significant amount of gold produced in the world. In 1970, South Africa accounted for lost 80% of the gold produced in the world, but the percentage is less than 10 today. This drop in South Africa’s gold mining capabilities can be attributed to difficulty in mining gold ore, local economic problems, strict controls, etc.
While it used to be an overwhelming force in the production of gold in the world, but recently other countries like China, the U.S., Australia and Russia have produced more gold than South Africa. In 2007, China began to produce more gold than South Africa—which marked the first time that a non-African country became the world’s leading supplier of gold in a century.
In 2013, the world’s total gold production was 2,770 Metric tons, of which China produced 420 metric tons, Australia produced 255 Metric Tons and the U.S. produced 227 Metric Tons. South Africa produced 145 Metric tons, coming in at number 6, even though for much of recent history it has been the largest producer of Gold ( for instance, in 2006, it produced 272 Metric tons—the highest of any country in the world).
In 2012, China produced 403 tons of gold and was the world’s top gold-producing country. It was the world’s top producer of gold for 6 years in a row. Zijin Mining Group is China’s biggest gold producer. The country holds over 1,054 tons of gold, as per the World Gold Council.
In the U.S., the top gold producing states are Nevada, Alaska and California.
According to the National Mining Association, the world’s demand for gold outpaces the gold supply, by almost 60%, which is creating an “ongoing shortage.”