A new era of gold has broken on us. After a decline in the price of gold in the 1980s and the 1990s gold’s value has steadily risen since the turn of the century . For the first time in history it has passed the $1,500 mark for an ounce of gold.
Gold has exercised power for ages. People have been looking for gold since the beginning of mankind . Whole empires have been built on gold. Spanish conquistadores conquered all of Central and South America in order to bring gold back to their home countries. Inca and Maya civilizations worshipped gold and thought it came from the sun. Explorers travelled for thousands of miles in search of the precious metal.
Gold is, once again, in demand . People want to have gold as a kind of security in unstable times. They invest in gold instead of saving their money in banks. Many people argue that since 9/11 the world has become a more dangerous place.
When in 2008 the financial markets collapsed the major currencies of the world became weaker. Investors were no longer sure how safe their money was. They bought more and more gold which made the price of the yellow metal rise .
One of the reasons why gold is so valuable is that it practically cannot be destroyed . It always stays the same and never changes. It can be recycled and afterwards be used for many things. In Iraq poor people collect gold dust and bring it back to jewellery shops to be recycled . Recycling gold is also a big issue in Japan, where gold is collected from old mobile phones and other industrial waste .
Gold is especially popular in India, where it has become a form of investment for the growing Indian middle class. In China it was the colour of ancient emperors . Today people buy gold and offer it as a New Year’s present.
Around the world the gold hype is growing. Last year the first gold ATM was introduced by a German businessman. The “Gold to Go” machine currently operates in Germany, the Arab Emirates, Las Vegas and London. In Britain and the United States people are having parties where they bring their golden jewellery along and sell it to brokers . Panning for gold in California’s rivers has become popular again, one and a half centuries after the big gold rush.
The demand for the metal and increased production leads to a number of environmental problems. A single ounce of gold produces over 30 tons of waste , more than any other metal on earth. Poisonous substances can leak into rivers and contaminate the water. In Peru and Brazil wide areas of the Amazon rainforest are cut down by the illegal mining of gold.
With the price of gold going up, many economists want the major countries to go back to the gold standard , in which the US dollar and other important currencies are linked to the gold price. After World War II, a new global monetary system set the gold price at $35 an ounce.
During the time of the gold standard the value of a country’s money was the same as the gold it had. It had a stabilizing effect on the economy . The government was only allowed to print and circulate as much money as it had gold. This led to lower inflation rates. In 1971, American President Richard Nixon left the gold standard.
On the other side, the gold standard can have disadvantages because in financially troublesome times the government cannot put more money into circulation to encourage the population to spend more.