Brief History of Gold and the U.S. Dollar
About 15 years after the establishment of the U.S. government, Congress enacted the Coinage Act of 1792 which established the U.S. Dollar as the official national currency. The U.S. Dollar was valued at 1.7g of gold or one-tenth of an eagle; an eagle represented 17g of gold. The U.S. Dollar value experienced only minor fluctuations in the first one hundred years from its inception. Some adjustments had to be made to the U.S. Dollar’s value because large quantities of silver were discovered and introduced into the market causing gold value to increase. By the end of the 1930s, wars and deficit spending caused the downward spiral of the U.S. Dollar’s value.
After WWII, an attempt at a global currency based upon the U.S. Dollar was established at the Bretton Woods agreement. It was decided that all countries would manage their currency using a fixed rate with the U.S. Dollar as the exchange currency. The U.S. Dollar was valued at $35 per troy ounce of gold; this is the famed “gold standard.” Because of continued deficit spending, the U.S. Dollar was no longer able to maintain this standard. The value of the U.S. Dollar in relation to gold is now considered “floating” or fluctuating; prices have been spotted soaring near $1000 per troy ounce!
Current Venues for Gold Exchange
Gold may be purchased and sold through a variety of venues. The most popular are coin dealers, auction sites, internet exchange sites, and private sellers. Research has shown that the best opportunity to buy gold at a low price and sell high is found by purchasing gold directly from private sellers; this venue reduces unnecessary administrative fees.
Determining Gold Prices
The type of gold to be sold must be identified before a price can be established for it. Only 24 karat gold is considered pure gold. The most common type of scrap gold is 14 karat gold which has 14 parts gold and 10 parts of other metal alloy material. 14 karat gold is only 58% gold and will be priced accordingly.
Some common terms used within the gold industry are troy ounce, gram, and spot price. The troy ounce is a unit of measure used to determine the weight of gold and other precious metals. One troy ounce equates to 31.1g. The spot price of gold represents the current price of gold in U.S. Dollars; prices fluctuate so knowing the current spot price is very important to accurately determine gold price per gram. By dividing the gold’s spot price per ounce by 31.1g, one may determine the current gold price per gram.