Who invented gold

The first piece of gold was noticed by James Marshall early on the morning of January 24, His own words describe the event:. I then collected four or five pieces and went up to Mr. Marshall and his workers tested the metal in several ways, including a lye bath.

After consulting an encyclopedia and conducting various tests on the metal, Sutter decided Marshall was right. It was pure gold. The following day Sutter himself came up to the mill site, and he asked for the promise of secrecy from all the workers. The Captain knew that if the word got out his laborers at the Fort would desert him. Although the gold standard seems as though it was largely a failure, there are advantages to the system.

The inability for governments to inflate the value of money because it is tied to the supply of gold make it difficult for inflation to increase significantly, while a globally accepted gold standard fixes exchange rates, reducing economic uncertainty.

However, high inflation can occur when war destroys large parts of economies, which was exemplified in the aftermath of World War I. The inability to increase the money supply is often cited as the key issue under the gold standard.

Many blamed the gold standard for prolonging the Great Depression, as the money supply was unable to be increased to mitigate the effects of the depression. As mentioned earlier, this led many countries to finally abandon the gold standard all together and never look back.

Some economists also believe that the inability to increase the money supply under the gold standard puts a limit on the amount an economy can grow. The gold standard tends to restrict central banks from taking measures to correct issues within an economy.

Angie Picardo, of NerdWallet, believes that a perfect current example of the perils of the gold standard could be seen during the global financial crisis in the Eurozone, especially Greece. Although the Euro is not pegged to gold, the nature of the fixed Euro exchange rate across the Eurozone made it very difficult for struggling economies to get out of the crisis.

The necessity to maintain a fixed exchange rate with other stronger economies in the Eurozone made it difficult to manipulate the Euro as well as the money supply to combat effects of the crisis. Roubini argues that the gold standard and other fixed exchange rate regimes also exacerbate shifts in the business cycle.

It was only once we moved to fiat money that central banks were able to smooth the business cycle, and make it less volatile, as we did during the financial economic crisis. Some have cited that another disadvantage of the gold standard is that countries with less reserves are at a significant disadvantage to those with more gold reserves.

There are still advocates for the gold standard, many coming out during the global financial crisis citing, among other advantages, that the gold standard would create greater price stability than issuing fiat money based solely on confidence. Austrian Economic Theory is famed for favoring the gold standard.

Proponents of Austrian economics believe that manipulating the money supply after the gold standard abandonment is what has actually led to instability in global financial markets over the years. The Fed as it currently operates is clearly a cartelization device that shoves new money into the pockets of rich bankers, and that allows the government to finance massive deficits much more cheaply than would otherwise be possible.

Having presented the advantages and disadvantages above, there is no doubt that the mainstream economic view is that the gold standard is not a feasible way forward.

However, it must be said, as with many things in this world, there are two sides to every coin. If you have made it this far, you will know that gold has a long history of human obsession dating back over years. From the very first time that mankind laid eyes on gold, it has led to an insatiable desire for the metal that has never wavered. That mutual desire for gold that captivated civilizations all over the world independently of each other facilitated the global adoption of gold as a medium of exchange and later, of course, the gold standard.

Since the end of the gold standard the price and production of gold has skyrocketed globally and along with it, so has demand. Judging by the last years or so, it seems unlikely that our obsession with the precious metal will change any time soon. Make sure to catch the rest of this FocusEconomics blog series on gold in which we will seek to convey why gold is such a precious metal.

Part three will cover the top economic gold producers in the world and their economic outlooks for Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinion of FocusEconomics S. Views, forecasts or estimates are as of the date of the publication and are subject to change without notice. This report may provide addresses of, or contain hyperlinks to, other internet websites.

Gold, measured out, became money. Gold gave rise to the concept of money itself: portable, private, and permanent. Gold and silver in standardized coins came to replace barter arrangements, and made trade in the Classic period much easier.

Gold was money in ancient Greece. Gold was associated with water logical, since most of it was found in streams , and it was supposed that gold was a particularly dense combination of water and sunlight.

As far back as B. In ancient Egypt, around the time of Seti I B. Where is that gold mine located? Modern thought is that it portrays the Wadi Fawakhir region in which the El Sid gold mine is located, but the matter is far from settled. Jason and the Argonauts sought the Golden Fleece around B. Early miners would use water power to propel gold-bearing sand over the hide of a sheep, which would trap the tiny, but heavy, flakes of gold. This primitive form of hydraulic mining began thousands of years ago, and was still being used by some miners as recently as the California gold rush of The first use of gold as money occurred around B.

Their science may have been primitive, but the Greeks learned much about the practicalities of gold mining. By the time of the death of Alexander of Macedon B. Some of the mines were owned by the state, some were worked privately with a royalty paid to the state. Also, nomads such as the Scythians and Cimmerians worked placer mines all over the region.

Some of the Roman innovations include stream-based gold mining constructs such as sluices, water wheels, and mining hydraulics. Approaching modern times, in the first hallmarking systems for ascertaining and confirming the quality of precious metals were founded in London. Come , the United Kingdom established the original Gold Standard, linking 77 shillings to gold at mint price. It was this point that the United States transitioned to the now globally standardized fiat system, which values currency against other foreign currency instead of gold or a physical commodity.

Because the fiat system is not based in a physical commodity, it can be worrisome to consider the possibilities if the U. After all, financial institutions still use gold as backing for loans!