The worldwide demand for pure gold is about 4,000 tons per year. Why is the need so great, and what is gold even used for?
Gold has been considered a symbol of prestige throughout history, already since ancient times. In ancient Egypt, for example, gold was regarded as a divine and indestructible metal associated with the radiant sun. The ancient Egyptians consumed gold to cleanse the spirit, the mind, and the body. In ancient Greece, gold was mainly used as a financial instrument. That it was still considered mysterious in nature, however, could be seen in alchemy as well as in how gold was a traditional spoil of war throughout the ages.
The Latin name for gold, “aurum”, comes from the Sabine “ausum”, which means the shining dawn. Hence also the symbol “Au” in the periodic table of elements. You may have realized that the Aufort brand name, too, is no coincidence: fusing together “Au” and “fort”, it means fort of gold.
By its very nature, gold is a finite mineral that cannot be produced meanwhile, additional currency is constantly being printed by governments). Finding and mining gold has become increasingly difficult, as it requires digging deeper and deeper into the earth. This also drives up the cost of the mining process. All this endows gold with intrinsic value that has been preserved throughout history.
Every gold item is stamped with a millesimal fineness or carat rating, depending on the country where the gold is sold. Millesimal fineness is used in Europe, while in the United States, for example, gold purity is indicated in carats. Most people have come into contact with gold jewelry, and most gold jewelry has a fineness of 585 (14 carats), which means that the piece of jewelry contains 58.5% pure gold. The rest is made up of other metals. The more reddish the gold, the higher the copper content of a piece of gold jewelry. Mixing silver into gold jewelry, on the other hand, produces highly popular white gold. Investment gold has a fineness of 999 (24 carats), which is the highest possible level of purity.
Gold has always played an important role in our society. Gold and silver are considered the world’s first and only “good” money. Gold has been used as money since as early as around 550 BC. But what is “good” money anyway? Find out in our blog post “Aristotle’s Characteristics of Good Money”.
Paper money eventually returns to its intrinsic value — zero.” — Voltaire
The global demand for gold is high. Approximately 50% of this comes from the jewelry industry, followed by investments, and industrial applications, such as technology and medicine.
The gold standard has been the foundation of monetary policy throughout history. The International Monetary Fund (IMF) was established in 1944. Since then, the IMF has been working to ensure the stability of the international monetary system. Until the 1970s, the focus was on the preservation of the international gold standard. In 1932, after the Great Depression, The United States of America became the last country to stop using the gold standard, but it was not until August 1971 that they completely abandoned it. This is known as the end of the Bretton Woods system. Most European countries went off the gold standard after the First World War in 1914 because they were unable to repay the large debts accrued due to the war in gold. Today, the IMF’s priorities are ensuring sustainable and stable global economic growth and preventing financial crises.
Throughout history, the price of gold has gone up, primarily due to increasing demand. Decreases in the purchasing power of currency (inflation) also lead to considerable increases in the price of gold. Inflation occurs as more and more currency enters into circulation in the global economy. Simply put, every note of currency printed by governments decreases the value of the currency already in circulation. This is one reason why our daily groceries become more expensive over time. Thus, if you wish to preserve the value of your hard-earned money over the long term, it makes sense to store it in gold.