A 5,000-Year Track Record
Gold has served as money across virtually every major civilization in recorded history. While currencies have come and gone, gold has maintained its role as a store of value across millennia.
Understanding this history provides context for gold's current role—though past performance, even over 5,000 years, doesn't guarantee future results.
1792: The Coinage Act
The United States defines the dollar in terms of precious metal. A dollar equals 371.25 grains of pure silver or 24.75 grains of gold—a specific weight, not an arbitrary unit.
1913: The Federal Reserve Act
Congress creates the Federal Reserve System to provide elastic currency and serve as lender of last resort. The dollar remains convertible to gold, but monetary policy gains new flexibility.
1933: Executive Order 6102
During the Great Depression, President Roosevelt requires citizens to exchange gold for paper currency at $20.67/oz. The government later revalues gold to $35/oz— a 69% increase in the dollar price of gold.
1971: End of Bretton Woods
President Nixon suspends dollar convertibility to gold. The "temporary" measure becomes permanent. For the first time in modern history, no major currency is backed by gold.
1974: Gold Ownership Legalized
After 41 years, Americans can again legally own gold. The restriction that began in 1933 ends. Private gold ownership resumes.
Today: Central Bank Reserve Asset
Central banks hold approximately 36,000 tonnes of gold reserves. After decades of selling, central banks became net buyers in 2010 and have continued accumulating.
Historical Context ≠ Prediction
Gold's historical track record is remarkable. But history doesn't move in straight lines:
1980-2000: Two Decades of Decline
Gold fell from $850 to $250—a 70% drop over 20 years. Investors who bought at the 1980 peak waited decades to break even.
Past Doesn't Guarantee Future
Gold's monetary history is compelling context. But past performance—even over millennia—doesn't guarantee future results.
The Historical Pattern
Throughout history, when governments have expanded money supply to fund deficits, gold has tended to maintain purchasing power relative to the debased currency.
Whether this pattern continues depends on factors no one can predict with certainty. What we can say: gold has outlasted every fiat currency that has ever existed.
Questions About Gold's Role Today?
We can discuss how historical context applies to your situation—and why it might or might not make sense for your portfolio.