DUBAI GOLD: GOLD AS A FORM OF MONEY - Goldy Precious Jewellery Trading LLC, Dubai

DUBAI GOLD | 18 JANUARY 2025

Money and gold have a long and illustrious history together. In addition to being a type of money in and of itself, gold serves as the foundation for a system of paper money whose value is guaranteed by gold.

Prior to the invention of money, items were bartered. A chicken could purchase ten loaves of bread, while a bushel of apples could purchase a chicken. However, your barter partner would have to have a chicken to sell in addition to the bushel of apples, or else they would wind up with 10 loaves of bread. Commodities evolved into a sort of money to balance out these innate imbalances.

Although bronze coins were first used as money in China about 3,000 years ago, Croesus of Lydia in what is now western Turkey is credited with creating the first real gold coin in 560 BC. These coins added to the currency’s legitimacy because they were of a regulated purity and were stamped with the coin’s weight and picture. With several nations minting their own coins over the ages, such as the Spanish Doubloon and the Roman Aureus, which frequently featured the ruler of the day, this type of gold currency spread around the world. Although gold is still acknowledged as a kind of money, its worth is determined by market demand and price fluctuations. Because actual gold is known globally and maintains its currency status despite the widespread usage of fiat money, many individuals opt to invest in it.

They might also have doubts about the ability of government-issued fiat money to hold its value in comparison to gold. One example is the global inflation that has been raging for the past two years. The cost of commodities has rapidly increased because of central banks printing large quantities of money to boost weak economies in the wake of the global financial crisis and the epidemic.

Since gold is a commodity, its value typically rises in tandem with the price of other items. Furthermore, gold has a solid track record of holding its value during periods of inflation, even though the relationship between gold and inflation is somewhat imperfect.

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