Historical Price of Gold
The overall value of gold has a rich and storied history. Even though this precious metal was being used as legal tender all the way back to 643 BC, we can only track its value back to 30 BC, which is a little more than 2000 years.
Today, we will look at the value of gold and see how the price has changed over the last 2000 years, but mainly focusing on the past 100 years, because that’s where things get really interesting.
The Value of Gold during the Roman Empire
In 30 BC, when Emperor Augustus was in power, he set the price of a pound of gold and made it equal to 45 coins. It didn’t possess the same monetary value as it does today, but each pound was measured by the amount of coins the Emperor determined it was worth.
Nearly 200 years later, in 211 AD, Marcus Aurelius Antonius degraded gold’s overall value by converting a pound of gold into 50 coins, as opposed to the 45 coins that a pound was worth leading up to this point.
It was degraded even further by Diocletian in 284 AD, when he diluted the value to 60 coins per pound. And Constantine the Great diluted the value 20 years later to 70 coins per pound, because he needed additional money to finance his military.
The Value of Gold in Great Britain Near the End of the Middle Ages
Great Britain made a change in the year 1257 by setting gold’s price at 0.89 pounds per ounce. And they continued to raise the price of gold by about 1 pound every century until the year 1717, when the gold price had reached a 4.25 pounds.
Not too long after 1717, many nations began printing paper currencies. They backed this currency using the gold standard in the 1800s. But Great Britain continued to keep the value of gold at 4.25 pounds/ounce until the Bretton Woods Treaty was signed. This happened in 1944, which saw sweeping changes because at this point the majority of countries used the US dollar as their gold standard moving forward.
Why? In 1944, the United States owned 75% of the gold reserves available in the world.
The Value of Gold in the US Starting with the Great Depression
Shifting gears to the United States, it makes sense to follow the gold prices in the US from this point on since America had control of more than 75% of gold reserves throughout the entire world back then.
Prior to the US Gold Standard, the US dollar used the British Gold Standard. It was the British Gold Standard that was responsible for the Great Depression beginning in August 1929 and led to the massive stock market crash that followed in October 1929.
At this point in 1929, the value of gold was $20.63 per ounce. This was due to deflation, the depression, and the hoarding of the gold reserves that FDR forced Americans to hand in after he took office in 1933. The Gold Reserve Act, as it was called, was implemented in 1934.
From 1931 to 1934, gold doubled in value from $17.06 per ounce to $34.69 per ounce. From here, the value of gold didn’t precipitously change all that much until 1968, when it was suddenly worth $41.10 per ounce. In this same year, the feds also increased interest rates.
The US went into another recession in 1970, and the value of gold had dropped to $35.17 an ounce in 1969 and $37.44 an ounce in 1970. Within the next two years, the value of gold took a massive leap and went from the $37 in 1970 to nearly $64 an ounce in 1972. In 1973 the value of gold made a massive increase again to $106.72 an ounce. It leaped in price again in 1974 to $183.85 per ounce.
By 1978, the price of gold per ounce in the United States of America was $226. In 1979, it made another massive upward move and more than doubled to $512 per ounce. During this year, the Federal Reserve introduced a stop-go policy. This made inflation much worse, which is why the value of gold rose tremendously high.
In 1980, the value of gold was $589.75. But the price of gold per ounce started to fall in 1981 and it stayed relatively low all the way into the new millennium, when the price in 2001 was $276.50 per ounce. We were also in the middle of another recession at this point.
In 2002, the gold bull market began and over the next 20 years, the price of gold rose tremendously until it reached the current day price of $1757.22 per ounce.
As you can see, the gold has gained tremendous value over the last 2000 years. It’s the longest lasting currency in the history of the world and it will continue to gain value for many years to come.