Buying Gold As An Investment is an idea that is of interest to a lot of people these days. Putting one’s money to work in this way is best done, like all investing, carefully. The lure of owning gold is drawing thousands of Americans. It is not a new attraction.

More than 2,600 years before the birth of Christ, the Egyptians piled gold objects in their tombs as offerings to smooth the path of the dead in the afterlife.

Aesop told in his fables of the goose that laid-the golden eggs and of the greed of the people who killed the bird. Virgil wrote of the “cursed lust” for the metal; Shakespeare warned that “all that glisters is not gold.” Yes, “glisters” though the commonly used word is glitters.

Why the fascination? Rarity, for one thing. Only about 165,000 tons of gold have been taken from the earth in all of recorded history. Current annual production is estimated at about 2.3 million kilograms.

Gold is valued for its durability. It will not tarnish or corrode; it can be flattened into shapes so thin that light will shine through: only copper and silver conduct electricity better. To some people gold represents pure sheer beauty.

Great Britain adopted the gold standard – linking all its currency to the precious metal – in 1821, and by the end of the 19th century most of the Western countries, including the United States had followed suit.

In the Gold Rush days of the late 19th century, pure gold was actually used as money, particularly by prospectors eager to turn the precious dust into other commodities.

Elsewhere in the country currency remained the common medium of exchange. Gold was too cumbersome to be practical for most day-to-day transactions and, in its pure state, was too soft and vulnerable to damage.

The currency, however, was backed by gold and silver. Any American who wanted to could convert his money into metal During the Depression, President Franklin D. Roosevelt became concerned over the possibility that people worried about bank failures would withdraw their savings and demand gold in exchange. In 1933, by executive order, he imposed a ban on private ownership of gold by U.S. citizens.

Congress incorporated the ban in the Gold Reserve Act of 1934. The reserve act, in conjunction with a separate world agreement, also fixed the price of gold at $35 an ounce, raising it from $20.67. U.S. citizens could own gold bullion abroad, but only until 1961, when President Kennedy banned overseas holdings.

Gold remained the basic monetary unit. The world’s major currencies were valued according to how much gold they could buy at the $35-an-ounce price. Technically, anyone holding dollars could trade them for gold.

By 1968, however, there was a tremendous worldwide demand for gold, both for industrial use and from people who felt gold was a sounder investment than currencies that fluctuated from day to day.

On March 17, 1968, the United States and other major industrial nations agreed that it was impossible to continue selling, gold for $35 an ounce. But they did not want to cut their monetary systems completely free of gold, so they agreed on what is called a two-tier market.

The price at which gold would be exchanged between central banks and governments was set at $35 an ounce. If the United States government wanted to buy gold from the British government, for example, the price would be $35, If a foreign government held dollars and wanted gold, it could demand the bullion, at the $35 an ounce rate.

But the price in the so-called free market involving industrial users and foreign citizens was allowed to fluctuate, setting off the increases that prompted widespread speculation in gold.

The United Stales and the rest of the world officially went off the gold standard in 1971, when the U.S. government suspended the convertibility of gold for dollars held by foreign monetary authorities. That meant the United States no longer would pay its debts in gold.

At the same time, former President Richard M. Nixon devalued the dollar by raising the price of gold from $35 to $38 an ounce. On Feb, 13,1973, another agreement set the official rate of gold for central banks and governments at $42.22 an ounce.

Starting December 31, 1974, U.S. citizens were able to start buying gold as an investment. From that day forward they could buy, sell and trade gold, not only in the form of jewelry or industrial products, but also as shiny gold bars.