The record price of gold and the universal obsession with the
sparkling metal make it a parallel global power.
Lee Mace knelt on a sun-dappled riverbank in the heart of
California's mother lode. For two hours, he'd been taking turns with
his wife and their three children, shoveling dirt into a home-built
oak box, pouring buckets of water over the top, and rocking it back
and forth like a cradle. Gravity carried the heaviest particles
through a series of screens to a trap at the bottom, where Mr. Mace
removed them to cull by hand in a shallow prospector's pan.
He tilted the pan gently. He squinted into the black silt, as if
reading tea leaves. "Look," he said. And then they appeared: a
constellation of glowing flecks, none larger than the head of a pin.
It's hard to believe that crumbs like these have obsessed
humankind through the ages, but such is the history of gold -
indeed, the price of gold, which has become a parallel global power
of sorts. Treasure hunters have sought the rare yellow metal since
the dawn of civilization. In 3600 BC, gold was first smelted by the
Egyptians, who believed it was the flesh of the gods. The Greek poet
Pindar called gold "a child of Zeus," adding that "neither moth or
rust devoureth it, but the mind of man is devoured by this supreme
Empires have risen and fallen on tides of gold. Driven by gold
lust, Spanish conquistadors razed the civilizations of the Aztecs
and the Incas, who believed gold came from the sun. Tempted by the
promise of gold, explorers embarked on some of the most epic and
dangerous wild-goose chases in recorded history. (Though El Dorado
has since been confined to the dustbin with Atlantis and Shangri-
La, the mythic city endures as a metaphor for the pursuit of
Today, investors herald a new golden age. On April 21, the
metal's market value surpassed $1,500 per troy ounce for the first
Gold prices have climbed steeply since the turn of the
millennium, following two decades of gradual decline after the
precious metal's last peak in 1980.
Gold's worth has increased fivefold in the past decade and more
than tripled since 2005. And as prices soar, bolstered by private
investment and central banks, which started stockpiling gold last
year after two decades of selling it off, the metal is poised to
remake the world all over again.
"We are at one of these transit points in the history of gold.
And I've got a long view: My perspective goes back 6,000 years, not
just the past six hours," British historian Timothy Green says with
a chuckle. Mr. Green, has studied the yellow metal for more than 45
years and is the author, most recently, of the book "Ages of Gold,"
published by GFMS, a precious-metals consultancy in London.
"The grass-roots demand for gold - having gold coins under the
bed or buried in the garden or wherever you want to hide them -
that's coming back," he notes. It has also grown easier to own
"paper gold." Gold exchange-traded funds allow investors to bet on
gold without actually owning it and have proliferated in markets
worldwide since they first appeared in 2003 on the Australian
Securities Exchange. These are a far cry from ancient times, when,
Green adds, "only the wealthy rulers, the princes, the Tutankhamens,
could afford to have gold. It was a symbol of wealth and power."
In any era, understanding gold's worth as a commodity requires
some magical thinking. You can't eat it. You can't put it in your
gas tank. It won't keep you warm at night. It's not as immediately
useful as, say, cattle, which preceded gold as a widely accepted
unit of wealth. (Gold's value was originally pegged to the worth of
cows. The Latin word for money, "pecunia," comes from "pecus," which
means cattle, while the Indian "rupee" is derived from "rupa," or
cattle in Sanskrit.)
Gold does have industrial applications - from shielding sensitive
instruments against solar radiation in space to dental crowns and
the bonding wire in your iPhone - but these accounted for less than
one-ninth of the 3,812-ton global demand for gold last year,
according to the World Gold Council, an industry trade group. …