The New Era of Gold
A new era of gold has broken on us. After a decline in the price of gold in the 1980s and the 1990s gold’s value has steadily risen since the turn of the century . For the first time in history it has passed the $1,500 mark for an ounce of gold.
Gold has exercised power for ages. People have been looking for gold since the beginning of mankind . Whole empires have been built on gold. Spanish conquistadores conquered all of Central and South America in order to bring gold back to their home countries. Inca and Maya civilizations worshipped gold and thought it came from the sun. Explorers travelled for thousands of miles in search of the precious metal.
Gold is, once again, in demand . People want to have gold as a kind of security in unstable times. They invest in gold instead of saving their money in banks. Many people argue that since 9/11 the world has become a more dangerous place.
When in 2008 the financial markets collapsed the major currencies of the world became weaker. Investors were no longer sure how safe their money was. They bought more and more gold which made the price of the yellow metal rise .
One of the reasons why gold is so valuable is that it practically cannot be destroyed . It always stays the same and never changes. It can be recycled and afterwards be used for many things. In Iraq poor people collect gold dust and bring it back to jewellery shops to be recycled . Recycling gold is also a big issue in Japan, where gold is collected from old mobile phones and other industrial waste .
Gold bar from a Swiss bank
Gold is especially popular in India, where it has become a form of investment for the growing Indian middle class. In China it was the colour of ancient emperors . Today people buy gold and offer it as a New Year’s present.
Around the world the gold hype is growing. Last year the first gold ATM was introduced by a German businessman. The “Gold to Go” machine currently operates in Germany, the Arab Emirates, Las Vegas and London. In Britain and the United States people are having parties where they bring their golden jewellery along and sell it to brokers . Panning for gold in California’s rivers has become popular again, one and a half centuries after the big gold rush.
The demand for the metal and increased production leads to a number of environmental problems. A single ounce of gold produces over 30 tons of waste , more than any other metal on earth. Poisonous substances can leak into rivers and contaminate the water. In Peru and Brazil wide areas of the Amazon rainforest are cut down by the illegal mining of gold.
With the price of gold going up, many economists want the major countries to go back to the gold standard , in which the US dollar and other important currencies are linked to the gold price. After World War II, a new global monetary system set the gold price at $35 an ounce.
During the time of the gold standard the value of a country’s money was the same as the gold it had. It had a stabilizing effect on the economy . The government was only allowed to print and circulate as much money as it had gold. This led to lower inflation rates. In 1971, American President Richard Nixon left the gold standard.
On the other side, the gold standard can have disadvantages because in financially troublesome times the government cannot put more money into circulation to encourage the population to spend more.
- 9/11 = the terrorist attacks on The World Trade Centre and the Pentagon on September 11, 2001
- ancient = old
- argue = to say that something is true
- ATM = a machine outside a bank that you can use to get money from your account
- broker = someone who buys and sells things
- century = a hundred years
- circulate = move around in a system
- civilization = culture
- collapse = break down
- conquer = to get control of a country by fighting
- conquistador = Spanish soldier who invaded Mexico and Peru in the 16 th and 17 th centuries and defeated old civilizations there
- contaminate = poison; to make something unusable
- currency = the system or type of money that a country has
- currently = now
- decline = to go down
- demand = the need to have certain goods or products
- destroy = to damage completely so that it cannot be used any more
- disadvantage = bad side
- dust = powder that is made up of very small pieces of something
- economist = someone who studies the way in which money and goods are produced and the way they are traded
- economy = the system by which a country’s money and goods are produced and used
- empire = a group of countries that are controlled by a ruler
- environmental = about the world around us
- era = period, time
- especially = above all, very much
- exercise = to use something
- explorer = person who travels in order to find new lands
- global = worldwide
- gold standard = the value of money is fixed to gold
- government = people who rule a country
- hype =excitement, publicity
- illegal mining = to dig minerals and metals out of the ground without being allowed to
- in demand = people want it
- increase = to go up
- inflation = the rate at which prices go up
- investment = to use money or other valuable things to make a profit later on
- issue = topic
- jewellery shop = shop that buys and sells small pieces of metal that you can wear
- leak = to get somewhere through a hole
- mankind = all humans as a group
- mark = level, number
- monetary system = a system that controls the money of countries
- offer = give
- ounce = a unit for measuring weight ; an ounce is 28.35 grams
- pan = to wash rocks and earth in a metal container in order to separate gold from other things
- poisonous = something that can lead to death or other illnesses if you eat or drink it
- population = the people who live in a country
- practically = almost
- recycle = to use again
- rise = go up
- security = safety, protection
- stabilize = to be steady, not to change
- steadily = very slowly
- substance = material
- troublesome = bad, hard
- turn of the century = the end of the old and the beginning of the next one hundred years
- unstable = unsteady
- valuable = to be worth a lot
- value = what something is worth
- waste = materials that are not wanted, that you do not need anymore
- worship = pray to