Because gold is highly valued and in very limited supply, it has long been used as a medium of exchange or money. The first known use of gold in transactions dates back over 6000 years. Early transactions were done using pieces of gold or pieces of silver. The rarity, usefulness, and desirability of gold make it a substance of long-term value. Gold works well for this purpose because it has a high value, and it is durable, portable, and easily divisible.
Some early printings of paper money were backed by gold held in safekeeping for every unit of money that was placed in circulation. The United States once used a “gold standard” and maintained a stockpile of gold to back every paper dollar in circulation.
Under this gold standard, any person could present paper currency to the government and demand in exchange an equal value of gold. The gold standard was once used by many nations, but it eventually became too cumbersome and is no longer used by any nation.
The gold used as a financial backing for currency was most often held in the form of gold bars, also known as “gold bullion.” The use of gold bars kept manufacturing costs to a minimum and allowed convenient handling and storage. Today many governments, individuals, and institutions hold investments of gold in the convenient form of bullion.
The first gold coins were minted under the order of King Croesus of Lydia (a region of present-day Turkey) in about 560 BC. Gold coins were commonly used in transactions up through the early 1900s, when paper currency became a more common form of exchange. Gold coins were issued in two types of units. Some were denominated in units of currency, such as dollars, while others were issued in standard weights, such as ounces or grams.
Today gold coins are no longer in wide use for financial transactions. However, gold coins issued in specific weights are popular ways for people to purchase and own small amounts of gold for investment. Gold coins are also issued as “commemorative” items. Many people enjoy these commemorative coins because they have both a collectible value and a precious metal value.
| 2019 Gold Production | |
| Country | Metric Tons |
| China | 420 |
| Australia | 330 |
| Russia | 310 |
| United States | 200 |
| Canada | 180 |
| Indonesia | 160 |
| Ghana | 130 |
| Peru | 130 |
| Mexico | 110 |
| Kazakhstan | 100 |
| Uzbekistan | 100 |
| South Africa | 90 |
| Brazil | 85 |
| Argentina | 72 |
| Papua New Guinea | 70 |
| Other Countries | 800 |
| The values above are estimated gold production in metric tons. Data from USGS Mineral Commodity Summaries. |
