As we've seen, it also needs to be stable, portable and non-toxic. And it needs to be fairly rare - you might be surprised just how little gold there is in the world.
If you were to collect together every earring, every gold sovereign, the tiny traces gold in every computer chip, every pre-Columbian statuette, every wedding ring and melt it down, it's guesstimated that you'd be left with just one metre cube, or thereabouts. But scarcity and stability aren't the whole story.
Gold has one other quality that makes it the stand-out contender for currency in the periodic table. Gold is All the other metals in the periodic table are silvery-coloured except for copper - and as we've already seen, copper corrodes, turning green when exposed to moist air. That makes gold very distinctive. But how come no-one actually uses gold as a currency any more? The seminal moment came in , when Richard Nixon decided to sever the US dollar's tie to gold. Since then, every major currency has been backed by no more than legal "fiat" - the law of the land says you must accept it as payment.
Nixon made his decision for the simple reason that the US was running out of the necessary gold to back all the dollars it had printed. And here lies the problem with gold. Its supply bears no relation to the needs of the economy. The supply of gold depends on what can be mined. In the 16th Century, the discovery of South America and its vast gold deposits led to an enormous fall in the value of gold - and therefore an enormous increase in the price of everything else.
Since then, the problem has typically been the opposite - the supply of gold has been too rigid. For example, many countries escaped the Great Depression in the s by unhitching their currencies from the Gold Standard. Doing so freed them up to print more money and reflate their economies.
The demand for gold can vary wildly - and with a fixed supply, that can lead to equally wild swings in its price. That is hardly the behaviour of a stable store of value. So, to paraphrase Churchill, out of all the elements, gold makes the worst possible currency.
Phosphorus: Looming fertility crisis. Helium: Time to ban party balloons? Aluminium: It just keeps on giving. Fairtrade Foundation. Image source, British Museum. He pulls out a copy of the periodic table. Image source, Thinkstock.
For comparison, think of sodium, which literally explodes on contact with water. Mercury is very distinctive, even if harder to carry around safely, and lead is very dense even if somewhat silvery. Carbon is safe to handle; platinum or uranium is much rarer. What gives? Well, here we get to the meat of it: gold and silver to an extent is uniquely suited to making coins because it has the right proportions of each trait for the time it was used.
It is supremely long-lasting and safe, easy to verify and carry, easy to work into sanctioned shapes coins. Is uranium rarer? And so on. Gold imposed itself because it had just the right amount of each of these traits to make it an attractive option.
Silver and copper have established themselves as the runner-up metals for coinage throughout history as they share some of the properties of gold, but not enough to put them on equal footing: silver degrades somewhat and is much less distinctive, while copper degrades and is too abundant to be properly controlled by authorities.
Join the ZME newsletter for amazing science news, features, and exclusive scoops. More than 40, subscribers can't be wrong. Still, as history has shown, gold is a workable but not ideal medium for an economy.
Things will go swimmingly while your economy is small, but, eventually, you mine all the gold out. Not good. The reverse of the coin is that you can also have too much gold. After discovering the Americas, Spain set to work becoming ridiculously rich in the 15th and 16th through a combination of exploiting the locals and treasure fleets.
These were not named in jest — they were, to the fullest extent of the word, fleets of ships, all laden with treasures, all coming to Spain. Part of these treasures were goods including spices, lumber, skins, and all manner of nice, exotic things from the Americas; but a large part was represented by silver and gold, mined for cheap. This means that prices all over the continent were directly determined by how much each country had in store. Mercantilism, the idea that a country becomes richer by exporting more than it imports and gaining gold and silver from its partners would form out of this relationship.
But when you have a metal underpinning your currency, keeping a balance between how much of it you hoard and how productive your economy is becomes vital. Humanity has always thought of gold as an object of value, even before the invention of currency. People began to form tools out of copper and iron tens of thousands of years ago, but gold is the oldest metal that did not need a fire, hammer, and mold to fashion into anything.
Iron, copper, and most other metals occur as ore-bodies, which require time and energy to smelt. Gold occurs in a naturally malleable form, making it the most easily workable metal in existence. It doubled in utility after humans discovered they could combine two or three metals to form one tool. Many gods in Egyptian, Roman, and Greek mythology have had spears, swords, and armor made from gold, and many ancient monarchs began to follow suit.
In ancient times, the measly amount of gold that governments and trading companies could mine became idols, shrines, and holy objects. Rich men and officials later began making vases, cups, plates, and jewelry when there was an abundance, but turning gold into currency was unheard of until BC.
Damodice was responsible for producing the first gold coins, but Lydian traders began to make it a mainstream practice. As gold became more and more precious and ubiquitous, the kingdoms of the old world began engaging in multi-year wars that would leave towns and cities decimated. Prisoners of war, criminals, and slaves were sent into gold mines to dig for precious metals.
These ancient wars were not always over currency — as most of the time they were about religion and land — but gold was the primary enabler of these kingdoms to push harder and harder against one another. As engineers began to perfect metallurgical techniques, gold became a permanent presence in global currency. Goldsmiths from ancient Egypt formed the shekel, which was an alloy of one-third silver and two-thirds gold. It became the primary unit of monetary measurement in the Middle East.
The Romans had the Aurum, the origin of the chemical symbol for gold, which later became the basis for the pound, shilling, and pence that the United Kingdom uses today. As gold became more ingrained in global currencies, many countries began to back their monies by the amount of gold their country could produce.
In the s, many English citizens had homemade mints where they marked their gold coins with the percentage of pure gold found in them. However, this practice began to produce coins of irregular shapes, sometimes robbing them of any value as a legal tender. However, it gave rise to the early arguments for paper money, a more organized way of trading that would not see the light of day until the last days of World War I.
Americans began to adopt paper money before the British, but its value was reliant on the gold-producing capacity of the USA. During the Gold Standard era, anyone could go to a bank and exchange paper money for a set amount of gold.
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