Gold Shines

“Everything has its limit – iron ore cannot be educated into gold.” – Mark Twain

People have chased gold since they realized that keeping a barter economy was not always feasible because commodity money like grain rotted, salt scattered, and cows were tough to take to the market. So, they invented money: stone money (Yap Island), salt (China and Roman Empire), ivory (Fiji), elephant hair (Africa), tobacco (Solomon Islands), brick tea money (Siberia), East Indian Money Tree (Malay Peninsula), Copper money (Alaskan Indian), to name a few.

The history of precious metals shows that as early as 2500 B.C. gold, silver, and copper were used in Egypt and Asia Minor to pay for goods and services. The kingdom of Lydia was minting coins in 700 B.C. made of electrum, a pale-yellow alloy of gold and silver.

People minted coins. Silver and gold coins had high value, portability, and payments by tale were made, counting out the right amount rather than weighing it. Even though animals did not die on the way to market, and perishable commodities did not spoil, there was always the possibility of being robbed of commodity money and coins.

Ridges were added to coins made of precious metals because humans filed the edges of coins to get gold or silver dust which they then sold as bullion or bartered for goods.

The next step was storing wealth in gold and silver bars. Bars held value over time and were easier to store as wealth. Most nations store their gold bars with the Federal Reserve Bank of New York. From this location, nations can request payments to other countries and the respective gold amounts are moved from the safe shelves of the payor to the shelves of the payee.

The one troy ounce ingot today sells for around $5,200, while the 3 kg bar sells for around $167,000. The price of gold has increased dramatically in the last ten years by 700 percent.

If a currency was not made of gold and silver, its value was measured in gold and silver. This gold standard held for a while. After 1971 the gold standard became outdated as countries no longer backed the value of their currency with gold. Inflation exploded as countries printed money without any backing of gold or backing by goods and services. Fiat currency was born. Our U.S. fiat currency, the “greenbacks,” date back to 1862.

According to reports by the World Gold Council, the top 10 countries with the most gold reserves as of January 2025 are: U.S. (8,133.5 tons), Germany (3,355.1 tons), Italy (2,451.8 tons), France (2,436 tons), Russia (2,299.9 tons), China (2,068.8 tons), Switzerland (1,040 tons), Japan (846 tons), India (760.4 tons), and Netherlands (612.5 tons). U.S. gold reserves are kept in Fort Knox, Kentucky, but nobody has seen them in decades.

John Maynard Keynes, the famous Keynesian economist, wrote that gold is a “barbarous relic.”  Used somewhat in electronics and chemistry, gold has major uses in jewelry and as a store of value in ingots and collectible coins.

According to Ed Conway, the typical gold wedding band requires the removal “between 4 and 20 tons of rock” from the top of a mountain while traditional mining methods required “0.3 tons of ore” to make a wedding band.

Conway wrote that, in a single day, three-story tall trucks remove rocks from the top of a mountain, or the hole dug up into a mountain, the weight of the Empire State Building. “For a standard gold bar (400 troy ounces) they would have to dig out about 5,000 tons of earth.” It is thus no surprise that whole mountains have been torn down to produce gold. Nobody knows the exact amount of pure gold ever extracted.

And how do they produce gold? The rocks blasted out of the mountain are ground into a fine powder which is then mixed with a cyanide solution to separate the gold, quite a toxic method for the earth, humans, and animals.

It is not surprising that humans have tried for ages to turn other metals into gold. Enter medieval alchemists, scientists, and charlatans, trying to find the “philosopher’s stone or the great elixir” that would change lead or other common metals into gold and silver. The most famous alchemist, Nicolas Flamel, a Frenchman, claimed in 1382 that he was able to change lead into silver and mercury into gold.

Even though Nicolas Flamel claimed that he had found the “philosopher stone and the great elixir,” there is no evidence that gold and silver could be transmuted from other metals unless particle accelerators and nuclear reactors were used.

Although unsuccessful, medieval alchemists promoted unknowingly the advancement of chemistry, optics, mathematics, and astronomy. History is full of gold stories which point to human ingenuity and greed.

The medieval ruler of Mali, Mansa Musa (1312-1337), lived in spectacular splendor and largesse thanks to the gold mined in massive quantities by slaves.

Archimedes found the solution to a gold problem when he was hired by Hiero, the king of Syracuse, to detect if his crown was pure gold or was adulterated with silver. Archimedes found the solution while sitting in his bath and ran into the street shouting the infamous “Eureka,” I found it (the solution).

Gold is denser than silver and displaces more water in a tub when a gold crown is submerged than a crown made of both gold and silver. Silver is lighter so less water is displaced when such a crown is submerged.

Very few treasures in Mexico, Peru, and Colombia survived the European melting pot of the Conquistadores who looted temples like the Temple of the Sun at Cuzco.

Pizzaro and his men captured Atahualpa, the emperor of the Incas. Atahualpa offered to fill his prison apartments with gold in exchange for his freedom. He filled one room with gold and two rooms with silver. He kept his word, but Pizzaro not so much. Gold Inca treasures were melted for coins.

In 1492 Christopher Columbus and his men found gold jewelry on Arawak chiefs in the West Indies and, in the next 40 years, the fiercest gold rush ensued and “the majority of the known gold-producing regions of the New World were theirs.”

“The natives of pre-Columbian America prized the gold for its beauty, presuming that the shiny yellow metal had a divine origin. In Mexico, the Aztecs called it the excrement of the gods, while the Incas of Peru thought it to be the sweat of the sun.” Gold was not valued as a major metal for currency. Because it did not corrode, it was used for fishing hooks and other tools, or it was just admired for its beauty in decorative arts. All the gold confiscated by the Spaniards enabled them to fund their fearsome armada.

Not long ago, grave-robbers in Panama sold ancient gold objects to dentists to be melted down for use in dental fillings.

Never forget, “all that glitter is not gold.”