Of all the world’s precious metals, only gold combines lustrous beauty, easy workability, rarity and virtual indestructibility. Not even diamonds combine these four characteristics. Gold is so soft and malleable that an ounce can be stretched into a wire 50 miles long or hammered into a sheet so thin that it would cover 100 square feet.
Gold is found in the earth’s crust, and in seas, rivers, and plants. The practicality and expense of obtaining it from these diverse sources makes its recovery unlikely. Where gold does exist in any appreciable amount, it is difficult and expensive to mine, with 2 1/2 to 3 tons of ore required to extract an ounce at an estimated cost of $250 to $350.
For thousands of years, man used gold in temples, tombs and jewelry. About 600 BCE, King Croesus of Lydia had the first pure gold coin struck, and it became recognized and respected as a medium of exchange. As rare objects, early coins now far exceed their actual value in gold.
In the Middle Ages, goldsmiths were the most highly honored craftsmen, and their art enabled them to become the first bankers in recorded history. In return for holding a customer’s gold, they issued receipts, which in essence became the first paper money, which was the beginning of the gold standard.
The Spanish conquistadors encountered cultures that also treasured gold. These civilizations were on the opposite ends of the Earth, yet both valued the same shiny yellow metal.
Early settlers came to the New World looking for gold, and it was first found in North Carolina in 1799 and in Georgia in 1827. Later, the greatest rush of all time drew 40,000 diggers to California’s Sierra Nevada in 1849. More gold was found in Nevada in 1859, in South Dakota in 1876, and in Alaska’s Klondike in 1896. Geologists say that your chances of finding a deposit of gold are greater than your chances of holding on to it once you hit pay dirt.
About ten years after the Civil War, a real estate agent in the Richmond area named Bliss convinced at least six families from the North to come to Chester Station in Chesterfield County because land there was relatively cheap. In addition, there were rumors that a military chest containing $80,000 in gold was left behind by Union General Benjamin F. Butler in his hasty evacuation of the eastern part of the county. Butler was the same “Beast Butler” of New Orleans occupation fame. Further, according to the story, the chest was buried near a large pine tree. Property containing pine trees attracted treasure seekers and buyers.
Many people who came seeking their fortune had religious backgrounds and desired a church in their community. As the Chester settlement reached nearly 100 people, the Presbyterians and Congregationalists began to hold worship services in the Chester Hotel and the Masonic Hall at Chester Station. This was the foundation of the present Chester Presbyterian Church, considered the oldest church in the area. Some of Chester’s streets were perhaps named for early family members: Grove and Ecoff.
Gold’s record rally in recent months has been attributed to worries about inflation, the weakness of the dollar and the emergence of exchange traded funds. Financial experts seem to have missed the fact that China, the world’s greatest producer of gold, is a huge buyer of gold. In March, gold was selling for well over $1,400 an ounce.
As an investor, you may buy gold stocks on any of the exchanges, or you may buy futures on the commodities market in hopes that it will increase in value before delivery, or you may buy gold bullion and bury it in your back yard or pay for its storage in a more secure location. Gold bullion pays no interest, may be lost or stolen, and may decrease in value. But J. P. Morgan Chase & Company announced early this year that it will allow clients to use the metal as collateral in some transactions. Gold has reinvented itself as currency.
Gold is used commercially in jewelry, aerospace, computers, architecture, dentistry, electronics, computers, medicine and packaging. Our currency is reportedly backed by gold with large amounts stored under great security at Ft. Knox, KY. How much is stored is uncertain, and our currency remains an act of faith. We wonder how long our faith will last.
The value of gold rises as more money is printed and as inflation increases. As an amateur economist, I suggest that the government select an uninhabited mountain in Nevada, put a secure and well-guarded fence around it, and by Act of Congress, declare it to be pure gold, thus fully backing our money forever or at least for our children and grandchildren.