Much of gold’s value comes from its scarcity. Research suggests that if you added up the world’s holdings of gold throughout all of history, you would only get about 120,000 metric tons. And to understand how gold is still scarce today, consider that every year the world’s supply of gold increases 2,000 tons, in contrast to American steel which increases an average of 10,500 tons per hour!
Because of gold’s dynamic nature, investors place a value on gold for different reasons. Some will see gold and think of the scarcity, some will think of its ability to be traded, others will think about its potential as a safe haven investment, no matter the reason, investors will often look to gold when they are looking for an investment in precious metals.
Historic Gold Prices
From the first gold coins used as money at around 700 BC to modern day central banks and governments hoarding it, gold has had an eventful history. Below are just a few of the key dates and events in the history of gold in America:
- 1792: The Dollar is fixed by law at 24.75 grains or .05156 troy ounces of gold.
- 1837: The coinage was reworked and the dollar was revalued and fixed at 25.8 grains 9/10’s fine. One troy ounce of gold was now worth $20.67.
- 1837-1933: The value of one troy ounce of gold remained $20.67 for 96 years.
- 1933: President Roosevelt signed Presidential Executive Order 6102 making it unlawful to own gold coins, gold bullion, or gold certificates.
- 1934: The Gold Reserve Act passed Congress in just five days. All gold held by the Fed had title transferred to the U.S. Treasury.
- 1944: Adopted by Bretton Woods at $35 per troy ounce. The price remained until 1970.
- 1970: Gold begins to trade at around $40-42 per troy ounce.
- 1980: The value of gold reaches a new high at $837 per troy ounce.
- 1999-2001: Gold begins trading at $250.
- 2011: Gold reaches a historic high of $1924 per troy ounce only 10 years after trading at $250.