• Reading Level 5
Science | History | Geography | Citizenship | RE | PSHE


Fair trade chocolate and bananas are familiar. But what of gold? Is it time to wean ourselves off a resource said to cause endless suffering without having much practical use? To Aztecs it was ‘sweat of the Sun’, to Egyptians ‘God’s breath’. But the explanation some modern physicists give for the existence of Earth’s gold is as incredible as any myth: millions of years ago, two colliding stars created a burst of energy that sent rare elements cascading across the galaxy. Our planet was showered with a cloud of precious metals. So gold is literally a gift from the stars. Whether or not this theory is true, it is an appropriately fantastical origin myth for the world’s most coveted element. Gold has been the subject of worship, the material for the world’s most precious objects, the inspiration for migrations across oceans and continents. But gold does not only glitter: it casts a long shadow as well. It has motivated destructive wars, from the rapacious Spanish conquest of the Americas to Hitler’s invasion of Europe, which was partly spurred by a bullion shortage in Germany itself. What is more, mining gold is harsh, hazardous work, and those who wield the pickaxes see little of the profit. Many miners work in conditions close to slavery, and the UN estimates that up to a million of these workers are children. Gold habits die hard Fair trade coffee, fruit and chocolate are familiar enough by now. But this year, many campaigners are focusing on the much more rarefied resource of gold. A campaign against ‘dirty gold’ received its hundredth major backer just in time for Valentine’s Day; and last week demonstrators formed a ‘ring of gold’ outside St Paul’s in London to raise awareness of wedding bands in fair trade gold. But why do we need gold at all? Even Warren Buffet, the world’s second richest person, is bemused about that: ‘Gold gets dug out of the ground in Africa, or someplace,’ he reportedly said. ‘Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.’ So what gives gold its enormous value? In part, the answer is rarity. Gold has been mined for around 6,000 years, yet there is only enough of it above ground to fill roughly three Olympic-sized pools. It is also one of the least reactive elements: it can survive centuries on an ocean floor without a hint of rust. Finally, it is highly distinctive and impossible to fake convincingly. All of its qualities make gold an ideal material for use as high value currency. It has been used in coins since about 700 BC, and until the 20th century most national currencies were in theory representations of a quantity of gold. Worth its weight? Today, the ‘gold standard’ has been replaced by a system of ‘fiat money’, whereby a currency is valuable simply from the fact that a state declares it to be so. Yet many governments still keep giant stashes of the yellow metal in their treasury vaults. And rather than slowing, our production of gold is rocketing: more has been mined in the past ten years than in the previous 6,000. Some would label this avaricious to the point of insanity: lives are being squandered and countries torn apart, they say, for the sake of an element the practical value of which is very limited indeed. It is a parable of the follies of materialism. But some maverick economists are arguing the exact opposite. Many of the world’s financial woes, argue so-called ‘gold bugs’, come from governments’ total control over national currency. If the value of our money were based on a finite, real-world resource, those problems would be instantly fixed — and only a return to the gold standard could achieve this. KeywordsGold standard - A system in which the value of a currency is made equivalent to a certain value of gold. Gold's value does not change very much, so currencies on a gold standard usually experience little inflation; however, they can cause deflation by limiting the amount of money in the economy.

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