The development of the global precious metals market is closely linked to the evolution of the world economy. Its status as a safe haven also allows it to serve as an excellent barometer of the world’s geopolitical situation.
Since ancient times, in the most ancient civilizations, whether in China, Asia Minor or Greece, the transition to the regular use of monetary resources has been accompanied by the accumulation of wealth in the coffers of public authorities or the most privileged individuals. The development of trade in goods for money required the accumulation of monetary reserves. The use of precious metals was therefore necessary. This metal had to combine both commercial and monetary properties. Gold was the most suitable for this purpose. It was gold that, because of its unique properties, fulfilled the role of a universal standard.
The most important properties of gold are :
– its relative rarity ;
– its aesthetic value;
– its homogeneity – allowing any quantitative fraction to be isolated and subject to modification and weighing;
– its ability to form bars that can be counted and accounted for;
– its malleability at very low temperature which allows to strike coins;
– its durability and high resistance to all kinds of damage, including immunity to corrosion;
– its use in the manufacture of luxury goods, etc.
The unique combination of these properties has stimulated a wide variety of entrepreneurial activities, international trade, geographical discoveries, colonial conquests, economic interconnections between countries and civilizations, technical progress and the development of crafts and industry.
Gold is inherently a real value with no counterparty risk and, moreover, an excellent means of preserving wealth over time and space. Like paper currencies (the dollar, yen, yuan, Swiss franc etc.), the price of gold is influenced by political events, especially those of international importance, be they wars, geopolitical crises, elections in certain countries, etc.
This is why central banks hold part of their reserves in gold. It is the only reserve that does not generate debt and does not depreciate due to inflation, in the same proportion as paper money.