Gold has served as a stable means for storing wealth throughout thousands of years of human history. Its roots as a monetary metal likely trace back even further.
This remains true up to the present day, even as governments around the world have abandoned the gold standard in favor of a centrally planned and managed fiat currency regime. Gold is still a crucial financial asset.
Is it any wonder that virtually all major central banks, as well as the International Monetary Fund (IMF), continue to hold massive stockpiles of gold as a reserve asset? You would be right to wonder, If there's nothing particularly special about gold, why not some other commodity?
Of course, there is never a forthcoming answer from these financial institutions regarding the obvious purpose of the gold held on their balance sheets.
In most cases (the U.S. gold reserves held a Fort Knox are one notable exception), this central bank gold is in the form of 99.99% pure (.9999 fine) gold bars. Such bars are approved for trade on the massive commodities exchange in the U.S. known as COMEX.
Similar standards of quality and purity are enforced on other major exchanges, such as those operating in London and Shanghai.
Today, gold bars are one of the most popular forms of bullion that investors purchase for their portfolios.
The Role of Gold as Money Throughout History
It's fair to say that gold has been used as money for the vast majority of recorded history. Although many other items have at times served as money, including shells, salt, tobacco, and even shark's teeth, over time it became clear that gold fulfilled this role vastly better than any other commodity.
Gold didn't eventually win out as the best form of money simply because it was a shiny yellow metal (though this was one consideration). There are actually a number of special properties that make gold the ideal substance for use as money.
First of all, gold is the most malleable metal known to humanity. This means it can easily be forged in different shapes -- which is also what makes it useful as jewelry and other ornaments. High malleability became an important factor when states and empires began striking coins.
As a metal, gold is also uniform and divisible. It can easily be broken into smaller equivalent units for use as fractional money. You can imagine that dividing a form of money into equal parts is much more difficult, and at times impossible, with non-metallic commodities.
Just as importantly, gold is non-perishable. It doesn't spoil or expire like agricultural commodities. Unlike copper and other semi-precious or non-precious metals, it doesn't tarnish, rust, oxidize, or degrade thanks to its special chemical properties.
Moreover, gold is one of the densest materials on Earth. That makes it rather compact (in terms of volume) at a high weight. When money must be transported in large quantities, it makes sense that it shouldn't take up too much space. The portable nature of gold was one of its main appeals as money during ancient times.
It's worth noting that the distinctive hue and shine of pure gold does play a role, as well. It's not trivial to gold's historical acceptance as money that its color and luster make it among the most recognizable substances in the world, no matter where you are.
The History of the Classical Gold Standard
Gold held a de facto position as the "real thing" undergirding the treasuries of most countries and empires for many centuries before it became legally recognized as such under a true gold standard.
Even in antiquity, a government would issue gold coins as a form of money. These coins didn't often circulate, but simply were used for the collection of taxes and international trade.
Over time, gold coins routinely were debased by emperors and kings who were running short on funds.
New standards were gradually adopted in the Middle Ages that made such debasement of the money supply more difficult. In order to maintain public trust, governments adhered more strictly to standards of weight and purity for their gold coins.
This type of uniform policy was notably pursued by the emerging British Empire. Even though a gold standard can technically be limited to domestic applications, gold standard systems generally proved most useful when applied internationally.
The gold standard saw its "classical" period of enforcement during the late 19th and early 20th centuries. However, it was often suspended during wartime so that financing the war effort could be done with less restrictions.
This system never quite recovered after World War I despite briefly being reintroduced.
Although a squishier version of a gold standard, known as a gold-exchange standard, was in place up until 1971, the link between gold and money consistently eroded after the end of WWI, and especially in the wake of the Great Depression.
Which Countries Have the Most Gold?
Despite the demise of the gold standard, virtually all of the world's major powers maintain huge stockpiles of gold reserves.
The United States has the largest reserves in the world by a huge margin. Its stated reserves are 8,133.5 metric tons, more than double the next-closest country: Germany is second with 3,373.6 metric tons of gold.
The stockpile held by the International Monetary Fund (IMF) would actually rank third if it were a sovereign country. Italy and France round out the top 5, with each country holding more than 2,400 tons of gold on reserve.
Russia and China rank 6th and 7th, respectively. Russia only recently moved ahead, as it has consistently grown its gold reserves over the past decade. China has employed a very similar strategy, going as far as acquiring gold mines in other parts of the world.
Both countries list their official reserves at over 1,800 tons.
Of course, some countries are somewhat secretive about the size of their gold stockpiles. Many experts believe that China greatly understates its actual holdings. Its government only publishes data about its reserves once every five years or so. By contrast, Russia's central bank updates its gold reserve data on a monthly basis.
The U.S. actually accumulated more than 20,000 metric tons of gold in the aftermath of World War II. This was one of the primary reasons -- along with the huge size of the American economy -- that the dollar has functioned as the global reserve currency since the postwar period began.
Gold Bars From Around the World
There is a surprising level of diversity in the shape, appearance, and purity of other kinds of gold bars found elsewhere in the world.
While some of these kinds of bars do not carry the same liquidity and credibility as investments that a COMEX-approved gold bar does, they are still certainly interesting pieces for collectors.
Some bars are fashioned into interesting shapes, like boat bars from Hong Kong or bone bars from Brazil. The appearance of gold bars may exhibit unique qualities due to the process used to refine them, such as with the distinctive honeycomb bars of Thailand or the small oval-shaped Tezabi bars from Pakistan.
There are also gold doré bars that come directly from gold mines before they reach a refinery. These are typically 80% pure (.800 fine) or less.
It shouldn't be surprising (given the discussion above about the gold standard) that other bars are based on their historical reference to a unit or denomination of money, as is the case with the tael bars that are popular in parts of China and Southeast Asia.
This array of traditional kinds of gold bars from the world's disparate cultures are featured in the Industry Collection that is maintained in a traveling exhibit that is displayed throughout the year at different locations around the globe.
How Gold Bars Are Different from Other Kinds of Gold Bullion
There are several key differences between gold bars and other forms of bullion.
Jewelry is not usually considered bullion, even if it has a very high purity, due to its added fabrication costs and high markup. The same is true of gold watches. In some cultures, jewelry-like objects like pendants, pins, or other interesting shapes can function as bullion.
Compared to coins and other items made of gold, bars have the advantage of being more compact. They typically carry a lower premium over their melt value than coins because there is less need for intricate engraving.
It should still be emphasized that gold bars can feature a wide array of eye-catching designs.
The design that appears on the one-ounce gold bar you purchase may vary from a well-known Swiss refiner like Credit Suisse or PAMP Suisse; it may come from a government mint; or it may be made by a private refinery that is ISO-approved.
Each gold bar is marked or stamped with its exact weight and purity specifications for the benefit of consumers and wholesale traders.
In some cases, the bar will be accompanied by an assay certificate, which serves as a certificate of authenticity of sorts.
How Gold Bars Are Traded
London is undeniably the epicenter of the gold trade. The city is home to more vaults than anywhere else in the world, and its over-the-counter (OTC) gold market is incredibly vast.
The London Bullion Market Association (LBMA) and London Metals Exchange (LME) are the primary administrators of this daily phenomenon.
The gold traded here must be at least .995 fine, as is the case for gold approved for inclusion in an individual retirement account (IRA). However, in most cases the gold is at least "four-nines" pure, meaning it is .9999 fine.
Unlike the cruder poured gold bars more commonly seen during the 19th century and earlier, today's gold bars are minted by modern presses and can be manufactured to precise dimensions and purity levels.
Today, London "Good Delivery" bars must be 400 troy ounces. You can own a .9999 fine gold bar of this same exceptional quality, in a more manageable 1 oz size, without blowing a hole in your budget!
No matter what other decisions an investor is making about his or her portfolio, adding some physical gold is an indispensable way to backstop your investments against major market corrections or downturns.
Gold bars also allow you to hold something tangible that can be passed down for generations and help secure the financial future of your dependents -- regardless of what happens on Wall St.
Buy COMEX Approved Gold Bars at Gainesville Coins
Gainesville Coins is proud to offer the 1 oz COMEX Approved Gold Bar With Assay Certificate (.9999 Fine)!
Although coins and jewelry remain popular vehicles for gold bullion, the most common type of gold investment remains the 24-karat gold bar, also known as an ingot.
These bars are the most efficient way to store gold in a small space, making them the ideal form for people who store gold in vaults or trade physical gold on the international markets.
In fact, all of these .9999 fine, 1 oz gold bars are COMEX-approved, meaning they meet the specifications put forth by the official Commodities Exchange division of the New York Mercantile Exchange (NYMEX), run by the Chicago Mercantile Exchange (CME) Group.
The bar you receive may come from a variety of different refiners, or brands. This includes, but is not limited to, gold bars from Valcambi, Credit Suisse, PAMP Suisse, the Royal Canadian Mint, and the Perth Mint.
Each bar is at least .9999 fine gold, and contains 1 troy oz of pure gold content. The bar you receive will also be accompanied by its own assay certificate, certifying its authenticity and weight & purity specifications, in addition to finding these values stamped on the face of the bar.
If you're interested in adding pure gold bullion to your holdings but want the added assurance of one of the world's most trusted brands, then the 1 oz COMEX Approved Gold Bar With Assay Certificate (.9999 Fine) is the perfect addition! Get yours from Gainesville Coins today for competitive pricing!
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