As good as gold: the value of gold over time

Blog

Chloe Bazlen, Digital Engagement Officer

Gold, bullion, ingots, Au – call it what you want, people love it. Gold is one of the most prized metals, which is why we ‘go for gold’, look for a pot at the end of a rainbow, and think something is ‘worth its weight in gold.

Deep within the Bank of England are gold vaults containing over 400,000 bars of gold. Some of these are owned by the UK government, but most are owned by other governments and central banks around the world, and some other financial institutions. But how is it that gold earned its place in society as a first-place metal?

Gold originally came to Earth through meteorites which contained gold. At that time the surface of the planet was still forming and much of the gold sank due to its comparative weight. Most of the gold ended up in the Earth’s core, too deep and hot for any human to reach. Some of it, however, ended up in the Earth’s crust and for thousands of years people have found ways to mine gold. The rarity of the metal, the fact it’s non-renewable, and the difficulty in obtaining it is a large part of why gold is valuable today.

The word gold comes from the old English word ‘geolu’, meaning yellow, and for over two thousand years gold has been revered for its colour and beauty. Gold has been prized by civilizations around the globe for centuries. For some, like the ancient Mayans, it was used as decoration and had a symbolic value representing the sun.  

But because of its rarity, gold has long been connected to monetary value as well. The very first coins came from the ancient kingdom of Lydia, today part of modern Turkey. These coins were made of a naturally occurring alloy, or blend, of gold and silver called electrum and set the precedent for using the precious metal as currency.

But gold has many properties that make it valuable for more than just money and bullion (gold bars or ingots). It is virtually indestructible: it cannot rust or tarnish from exposure to air or water and can still look shiny after thousands of years. Gold is also very malleable, or soft. This means it can be hammered and bent to the right shape or size, without having to melt it at high temperatures. 

Today, gold is used in a range of industries. Jewellery and decorations are an obvious one, but did you know the device you’re reading this blog on contains gold? Because it is easy to work with, resistant to tarnishing, and an electrical conductor, gold is a valuable component in electronics today. Gold is also used in dentistry, so if you have a crown you just might have a golden tooth! 

One of the coolest (at least I think so!) and most surprising ways gold is used is as a coating for the visors used by astronauts and metal workers. This is because gold is very good at reflecting heat and light, and can be spread so thin that you can still see through it. This means that astronauts are, in a way, bringing this extra-terrestrial element back into space!

But it is important to remember that society’s unquenchable thirst for this shiny metal comes with consequences. In the 1700s, gold came to Britain largely from the Portuguese colony of Brazil. Enslaved African people worked in brutal conditions to extract gold from Brazilian mines, which was then shipped to Europe. This ultimately strengthened European economies at the expense of the enslaved.

Mining for gold also has a severe impact on the environment by displacing communities and wildlife, introducing toxins to drinking water and creating potentially exploitative conditions for workers. Because of this, there is a growing effort to recycle gold. Old electronics, for example, can be refined and turned into jewellery as a more ethical option. 

So, you might think gold doesn’t impact your life because we don’t use it for coins anymore, or you don’t wear a lot of gold jewellery. But there’s no doubt it plays a large role in our lives in modern society. Whether you use a smart phone containing gold or operate in a financial system that stores wealth in gold, it’s hard to understate the importance of this metal.