A Brief History of Gold

| 7 min read

On August 6th 2020, as this article was first being prepared, the price of gold hit its highest price in all of human history, at $2,075 per troy ounce. It would be easy to think that gold has been creeping up to this point slowly and stably for many hundreds of years, but just 20 years ago, you only would have had to pay around $275 for a troy ounce of gold. As gold has now crossed the $2,000 threshold for the first time, we thought we’d take a brief look at its history and some of the developments that have occurred since humans first saw the unmistakable glitter of this precious metal many centuries ago.

Nature’s gemstones are so compelling to observe we don’t always think about the precious metals used to hold the finely cut stones in place. But these metals are also created entirely by nature, and, unlike many gemstones, they are impossible to recreate in a lab. This is because gems are made up of many different elements, but precious metals are elements themselves. Silver, platinum and, more recently, palladium are all popular metals to set jewels into, but none is more desired or famous than gold. When it comes to the unique shine, shimmer and texture of gold, it is in a league of its own.

Gold Jewelry by Gemporia

Gold’s chemical symbol is Au, which is derived from its Latin name, ‘Aurum’. It is one of the earliest metals to have been used by humans and was initially found in alluvial deposits. Alluvial mining is the sourcing of minerals and metals that have been deposited by forces of nature. This is why it can often be ‘panned for’ in stream beds, where erosion and water flow has deposited small pieces. It can also be mined from rocks and underground veins in much the same way as many gemstones. The deepest mine in the world is a gold mine; the Mponeng gold mine near Johannesburg in South Africa is over 4 kilometers (2.5 miles) deep from ground level, and the journey to the bottom takes over an hour. Gold mining can be traced back to 2,500BC, when the Ancient Egyptians mined it for use in their jewelry. Its malleability (ability to be worked without breaking or cracking) and ductility (ability to be drawn into a thin wire) make it ideal for use in jewelry.

Gold Jewelry by Gemporia

Purity of Gold

Pure gold is known as 24 karat gold and is 100% gold. These days, it tends to be sold as 23 karat gold in this form (99.9% gold) as it is almost impossible to remove every last imperfection from the metal. It is rarely used in jewelry in this purity as it is too soft, so it is alloyed with other metals to give it more strength. You may be familiar with 9 karat gold, 10 karat gold, 14 karat gold and 18 karat gold, just four of the standards that gold is sold in around the world. Here’s how they break down.

  • 9 karat gold = 37.5% purity
  • 10 karat gold = 41.7% purity
  • 14 karat gold = 58.5% purity
  • 18 karat gold = 75% purity

The remainder of the alloy is often made up of other base and precious metals, such as copper, zinc, palladium and silver. Clever use of this process allows the final color of the gold to be tweaked. For example, white gold is often achieved by adding more palladium to the alloy and rose gold is the result of adding more copper. It’s even possible to create green gold by adding lots of silver and copper. Very rarely, it is even possible to find these colors of gold in nature, where Mother Nature has created these different mixes. In the UK, gold purity is stamped onto jewelry pieces via a process known as hallmarking. If your piece is stamped ‘375’, this refers to the percentages listed above and would indicate 9 karat gold.

Gold Jewelry by Gemporia

Price and Value of Gold

Gold is traded in troy ounces, most often in the US dollar currency. Troy ounces weigh more than a standard ounce, with just 12 troy ounces equalling a pound instead of the usual 16. A troy ounce weighs a little over 31 grams. The story of the price of gold over Gemporia’s history is quite incredible. On the day Gemporia launched - October 8th 2004 - pure gold was around $415 per troy ounce. Fifteen years later, the price was about $1,000 per ounce higher, having risen particularly quickly between 2007 and 2011 during the global credit crunch. Before August 2020, the all-time highest gold price dated from August 2011, when prices hit over $1,900 per ounce. The recent high is undoubtedly a result of the global market uncertainty caused by the Covid-19 pandemic. Let’s put all this in a broader context. In the 15 years before Gemporia launched (1989 to 2004), gold prices had remained remarkably stable at between $300 and $400 per troy ounce.

Gold has been called “possibly the world’s most stable currency”. Until fairly recently, the value of most currency systems was still based on the amount of gold in the vaults of each country. Because gold can always be melted and re-sold, gold jewelry will always retain an inherent value. Because gold physically exists, and because we cannot create any more than what is already on the planet, it retains a security in its value that electronic banking and more modern currency systems cannot. The more people that invest in gold, the less there is to buy, and the higher its value becomes. And so, the cycle continues.

Gold Jewelry by Gemporia

How Much Gold Is There?

Currently, a total of around 200,000 tonnes of gold is known to exist above ground. This would be around the size of a 21.5-meter cube if collected together. It is believed that 98% of all the gold ever mined is still in circulation, too, as gold can be recycled indefinitely. The reason why there is so little heritage jewelry that has survived the centuries is not that gold is not durable, because it is. It’s because very few pieces have survived the various depressions and recessions that have hit civilisation over many centuries. Many gold pieces are converted to cash by being melted down and sold as bullion (gold bars), many of which are eventually re-sold to jewellers and made back into jewelry.

What Is Gold Used For?

Around half of all mined gold is used in the jewelry industry, with around 40% being held in investments and the remaining 10% being used for industry. The most significant industrial use is in electronic devices, as the conductivity and corrosion-resistant properties of gold make it ideal for use in circuit boards and connectors inside computers. Almost every electronic device in your home, including your mobile phone, will contain a trace amount of gold. It may seem like this should have put the price of electronics through the roof in the last 15 years, but you’d be amazed just how little gold is needed in each device. Just one gram (0.03 troy ounces) of gold can be beaten into a sheet of one square meter (3.3 x 3.3 feet), measuring only four millionths of an inch thick. It can be made so thin it becomes transparent, and it can be used in this form to tint glass windows.

Gold Jewelry by Gemporia

Could We Run Out of Gold?

Of course. Gold is a finite resource, just like everything else on the planet, although there is no way of knowing how much more gold still lies underground and what percentage of it is already mined. But there could come a time when the only gold we have is ‘second hand’, and if the current investment trend continues, gold could become one of the most challenging and expensive materials to buy. Interestingly, some scientists believe that the gold we find close to the surface may have been brought to the Earth on comets, whereas the gold that formed as part of the Earth sank to its core while the planet was still developing, far beyond our reach. NASA geologists are also starting to believe that there may be precious metals, including gold, under the moon’s surface. Only time will tell.

There’s no doubt that gold is already one of the most precious and sought after of metals, and what better way to own a piece than as beautiful pieces of jewelry set with gorgeous gemstones?


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