People have been obsessed with gold since the beginning of civilization. Both the Egyptians and ancient Greeks valued the precious metal as a status symbol. The more gold you had, the higher you ranked in the natural order of things. In more recent times, gold rushes in Alaska and South Africa have caused major frenzies while changing lives.
People have a natural affinity for shiny things, which makes them desire gold and silver for its beauty. Especially gold, which is a simple, fairly boring metal that can be melted and formed into any desirable form. In many struggling countries, such as India, even the poorest citizens crave gold jewelry.
Prior to paper currency, the actual precious metal was used in trade. A certain amount of gold was assigned a certain value and used in exchange for some other commodity. Since gold and silver were easy to carry, the system worked well, involving the trade of equal commodities.
When governments began to mint currencies, gold and silver became natural choices. Their very rarity, especially gold, gave them an inherent value. People could trust the value of gold and silver. Slowly, however, beginning in the 1930s, world governments were no longer linking their currency to gold. The US dollar stopped being backed by gold in the 1970s. Instead of being backed by true value, word currencies became pieces of paper.
The role of gold changed from a trusted trading currency to a safe investment haven. Investors rely on the fact that while the value of paper currency will fluctuate, gold and silver will hold their value. Precious metals require no guarantees. As currencies lost their gold-backing, global central banks began purchasing and hoarding gold as a reserve currency whose value has been recognized throughout history.
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