The Path to the One Million Dollar Gold Bar

The One Million Dollar Gold Bar

This year, the spot price of gold hit a monumental record for the first time in history: $2,500 per troy ounce of the booming commodity. What makes this number so unique? This means that for the first time, a traditional 400-ounce gold bar is officially worth $1M and more – as the price of gold has only continued to rise since then.

How Did We Get Here?

Looking back to past years, it is clear to see what an astonishing achievement this is, going back as few as five years and as many as 50. This raises the question of where the valuation of gold began. What makes it such a sought-after investment to own? What path did gold take in its thousands of years to finally hit the million-dollar mark?

Where it all Began: Egypt – Byzantine

The history of the commodity known as gold is as fascinating as it is ancient, dating back thousands of years to well-known civilizations in Egypt, Greece, and Rome. As far back as 4000 BCE, gold was initially valued for its beauty and rarity, commonly worn as jewelry by Egyptians and Sumerians. Ancient Egyptians are recognized for being among the first to popularize gold as a tool for trading currency, propping the precious metal up as a symbol of wealth and power, resulting in extensive mining, especially in Nubia. Roughly a thousand years later, the Greeks and Romans introduced the gold coin to the world, establishing it as a basis for wealth within their monetary system.
Throughout the Medieval Middle Ages, gold was used primarily by kingdoms, empires, and the church. Its value was relatively stable but varied by region. It continued to circulate in the form of coins (solidus and bezant) in the Byzantine Empire and was used as a trade standard across Europe, the Middle East, and Asia. Similarly, gold became the basis of wealth and trade in regions like West Africa (Mali, Ghana), especially with North African traders.

Gold in the Renaissance – 19th Century

Moving closer to more modern historical times, the Renaissance and early modern period from 1500 to 1800 is when gold began to plant itself as a truly global commodity. European powers’ discovery of the Americas led to an influx of gold and silver into Europe, especially from Spanish colonies. While this increased supply, gold retained high value due to its role as a medium of exchange. Spain’s massive imports of gold and silver created a period of inflation but reinforced gold’s status in Europe and worldwide. Gold has become ubiquitous and traded extensively between Europe, Asia, and the Americas. As a result, the gold standard began to take shape during the 19th century.

The U.K. formally adopted the gold standard in 1819, pegging its currency to a fixed quantity of gold, setting a precedent for other countries. The gold rushes of the 19th century (e.g., the California Gold Rush in 1848) expanded global gold production significantly but did not drastically reduce its value due to consistent demand. During the mid-1800s and early 1900s, the international gold standard became dominant. Countries backed their currencies with gold, meaning the value of national currencies was tied directly to a fixed amount. Gold held its value relatively steadily during this period due to the discipline imposed by the gold standard. Major world currencies like the British pound, U.S. dollar, and French franc were tied to gold, creating a stable international monetary system.

Gold in the 20th Century

Unfortunately, the development of the First World War in 1914 disrupted the rise of gold and the gold standard. Many countries suspended the convertibility of their currencies to gold to fund the war effort, leading to inflation over the next four years.

A decade later, in 1929, the economy was blindsided by The Great Depression; the economic collapse led to the abandonment of the gold standard in many countries, as governments needed to increase the money supply without being limited by gold reserves.

In 1933, the United States – under President Franklin D. Roosevelt – officially abandoned the gold standard, and citizens were forced to sell their gold to the government at a fixed price of $20.67 per ounce. In 1934, the U.S. revalued gold at $35 per ounce to stabilize the economy. This led to the development of what is known as the Bretton Woods System: an agreement that established a post-WWII international monetary system where the U.S. dollar was pegged to gold at $35 per ounce, and other currencies were pegged to the U.S. dollar. The U.S. effectively held the world’s gold reserves, and the value of gold remained relatively stable during this three-decade period.

The Ending of Gold as Currency

The Gold Standard, as we are familiar with it, officially died at the hands of President Richard Nixon in 1971, when he dismantled the Bretton Woods System and ended the convertibility of the U.S. dollar to gold, leading to the era of floating exchange rates and fluctuating gold prices. After the end of the gold standard, gold became a free-traded commodity, and its price began to fluctuate based on market dynamics, supply, and demand. As a result, during the 1970s, gold prices surged.

By 1980, the price of gold reached an all-time high of around $850 per ounce due to high inflation and geopolitical tensions. Throughout the 80s and 90s, gold prices remained relatively subdued as inflation was controlled and economies stabilized. Prices hovered between $300 and $400 per ounce for much of this period.

Resurgence of Gold in the 21st Century

The new millennium arrived, and with it came a raging global crisis and a booming demand for the commodity. The early 21st century saw a resurgence in gold prices, driven by concerns over inflation, international instability, and demand from emerging markets (notably China and India). During the 2008 financial crisis, gold became a safe-haven asset, rising from $800 in 2007 to over $1,900 per ounce in 2011. Throughout the 2010s, gold remained volatile, fluctuating between $1,200 and $1,500 per ounce during much of the decade. Demand remained high as central banks increased their gold reserves and investors sought safe assets amid global uncertainty.

A Global Pandemic pushed Gold to New Heights

Finally, we have reached the current decade: the 2020s. A decade that will be remembered for the COVID-19 pandemic and the economic uncertainty that resulted. As the pandemic roared in the summer of 2020, gold prices surged again as global economies struggled with the pandemic’s financial impact. In August 2020, gold hit an all-time high of around $2,070 per ounce due to uncertainty, low interest rates, and large fiscal stimulus measures. As the economy began to recover from 2021 to today, gold prices fluctuated but remained above $1,700 per ounce, with some spikes driven by inflation fears, geopolitical tensions (e.g., the Russia-Ukraine war), and economic volatility.
Gold remains a significant asset for both investors and central banks. Rising inflation concerns, geopolitical risks, and currency volatility will continue driving demand for gold as a safe-haven asset. Today, the price of an ounce of gold stands strong at $2,581, or in other words, $1.032 million if you have one of those sought-after gold bars.

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