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Value of Gold

Gold has been considered a precious possession by various civilizations for more than 4,000 years, even in times when they had no interconnection. There is an enchanting attraction that people in all corners of the world could not escape.

 

This is due to several factors. The yellow metal is a beautiful, unique, rare element with a durable luster that continues to shine forever. Thanks to these remarkable properties, gold has played a crucial role in the world of jewelry, art and even monuments throughout history. To this day, gold retains its special position in the world. Just think of religious artifacts such as Buddha statues, temples and monotheistic shrines, the treasures of European royal houses, and how this element has been incorporated into the world's most iconic structures.

 

Apart from its aesthetic value, gold is also an indispensable element in various practical applications. About 10% of annual gold production, for example, is used in electronics; think of smartphones that cannot function without gold. Moreover, gold is essential in numerous medicines and is even used in exquisite culinary dishes. Because of these diverse factors, there has always been a high demand for this element, but this demand eventually came from a different quarter.

 

Monetary value of gold

Before the invention of money, barter was the common practice. This made the exchange of goods time-consuming and complex, making people mostly self-sufficient. This was unfortunate, because man's true potential comes to fruition when he can trade with others. This forms the basis of our current society, in which most people have one profession, but at the same time can benefit from the knowledge and products of countless other fields. Fundamentally, money is responsible for this situation, which is why we once created money as an indirect means of exchange to make trade easier and faster.

 

For thousands of years, people around the world used precious metals such as gold as an indirect medium of exchange for trade. This is because gold was always in demand because of its unique properties, combined with the extraordinary characteristics that make gold so suitable as a currency.

 

Gold is scarce, easily divisible, homogeneous, has a high value per unit weight, and is durable. Gold never wears out and lasts indefinitely. This also made gold an ideal savings vehicle.

 

Store of Value

Gold possesses extraordinary properties that have caused people to always desire it, and it has unique characteristics that make it ideally suited as a form of money. As a result, gold has historically played the most prominent role as a "Store of Value" in human history. This is because gold is an asset that retains its value.

 

Imagine owning a 10-gram gold bracelet. This is a valuable 'Store of Value' because you can still use the jewel, for example, 75 years from now. But the person who owns the bracelet can also have it melted down and used for something else, such as manufacturing another piece of jewelry, or for industrial, medical, or even culinary applications.

 

For thousands of years, people have used gold as a Store of Value and as a form of money. As a result, the amount of money in a society always reflected the amount of gold. This made money impervious to manipulation by governments and bankers.

 

Since the 1930s, almost every government in the world, including the Dutch government, chose to break the link between gold and money. From that crucial moment, governments were able to create money out of thin air. Since then, our money no longer has an intrinsic "Store of Value. Because our money no longer has an underlying value, as gold did, the money we use today loses a little of its value each year.

Historical CPI Netherlands

When you look at this graph of average consumer prices in the Netherlands between 1600 and 2022, the effect becomes clearly visible. In earlier times, prices were very stable because the quantity of gold money was also stable. However, since money can be created out of thin air since the decoupling of money from gold, prices have increased by thousands of percent.

Golden 10 Guilders

To symbolize this loss of value of our money, we can look at the value of the last minted gold guilder coin ever used by the Dutch. This was the gold ƒ10 coin, weighing just over 6 grams of gold. In 2022, this coin represented an average gold value of €325. This sends a powerful message that despite the fact that gold is not an official legal tender, it is still a Store of Value. While the government can create more units of money, this means that all prices, including the price of gold, will rise.

Historical Gold Price in Dollars

The chart above clearly shows how the price of gold has risen dramatically due to changes in the organization of our money system. Between 1800 and 1930, the price of gold per troy ounce hovered around $20. In the 1930s, this price rose to around $35, which remained so until 1971. In that year, the United States, as the last economy, broke the link between its currency and gold. Since then, the price of gold has skyrocketed. For example, a piece of gold weighing about 31 grams was worth $35 50 years ago. But in 2022, the same unit reached a record value of $2050.

Historic Gold Price in Euros

We see a similar trend with our own euro. When the euro was introduced in early 1999, the gold price was around €250 per troy ounce, while earlier in 2022 it had risen to €1870. This illustrates that, despite the fact that governments worldwide continue to create money on a large scale, gold still functions as a 'Store of Value'. With the current monetary system, there seems to be no end to the depreciation of our money, which means a rising price for the precious metal gold.

That is why AYN cherishes the mission to offer the most beautiful and sustainable jewelry at a fixed low percentage, which makes us distinctive in this industry. We do this based on the belief that we want to offer people the opportunity to invest in their own beauty and at the same time safeguard their prosperity for the future.

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