The ‘Gold Standard’ – The History of Gold as Money

Est. Reading: 3 minutes
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November 23, 2023
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Table of Contents

For millennia, gold has been a source of fascination for many ancient civilisations.

As it can be found all over the globe, gold been mentioned countless times in surviving historical texts – from ancient Egypt and Mesopotamia, to the Aztec and Inca civilisations of Mexico and Peru.

The history of gold mining likely dates back even further though, with archaeologists in Bulgaria uncovering the oldest piece of gold jewellery ever found, dating back 6,600 years.

Gold hasn’t always been used just for jewellery though; it’s also been widely used throughout the world as a form of currency.

But how did this come about? And how has this influenced how we use money today?

Ancient Origins: Using Gold as Money

Gold has long been used as a store and exchange of value in the form of gold bullion or ingots, owing its origins to the ancient region of Mesopotamia during the 7th millennium BC.

Despite this, the first known gold coins weren’t actually struck until around 600 BC. This took place in the ancient kingdom of Lydia – in modern-day Turkey – and it’s believed to have been the first-time gold coins were used in the same way that we use and understand ‘money’ today.

These Lydian gold coins were made of electrum – an alloy of gold and silver called ‘white gold’ in ancient times – and were stamped with various pictures to represent different values.

Each individual Lydian coin weighed approximately 5 grams and are believed to have ranged in value from covering the cost of one day’s food and drink, to having the buying power of eleven sheep – a very considerable purchase at the time!

Gold Money in Ancient Europe

Given ancient Lydia’s trade influence in the region, their gold coinage gradually spread to nearby Greek cities in Asia Minor. From there, the process of using gold coins as money quickly spread to the Greek mainland.

Thanks to Greece’s legendary conquests during the reign of Alexander the Great, ancient Greek gold coins then gradually spread throughout the Mediterranean.

Largely influenced by the Greeks, the first Roman Republic also used gold coinage as money.

As ancient Rome then expanded its reach with the growth of the Roman Empire, gold ‘money’ become a common sight throughout Europe and North Africa – carrying on well into the Middle Ages with the Eastern Roman Empire, or Byzantines.

The Gold Standard

Under a ‘Gold Standard’, a country’s national currency is directly linked to gold – making it the only way of redeeming paper currency.

The first Gold Standard was introduced in the 1870s, existing until the outbreak of World War I in 1914.

As part of this standard, gold coins were no longer used in direct circulation as a way to make payments. Rather, gold was stored safely in vaults by centralised authorities who issued receipts for its corresponding value – it’s these paper receipts that became the inspiration for the common bank notes of today.

In today’s world however, currencies are no longer directly backed by physical commodities like gold or silver. Although many central banks and governments still hold significant gold reserves, ‘fiat’ money is instead decreed by governments to be legal tender as a means of payment.

Looking for your own piece of history?

At Martin Gear Jewellers, we’ve been manufacturing and selling gold jewellery for decades, right from our Dublin City Centre shop. We also proudly sell a limited range of historical gold coins.

Looking for something more? Simply drop into our store on 5 Mary St, Dublin 1, or alternatively, give us a call on (01) 872 8726.

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