The reasons why gold was no longer used as a payment method

Gold It has been and remains one of the most valuable minerals throughout history.

Its durability, rarity and unique value placed it on the list as one of the main means of payment when making commercial transactions. However, the passage of time meant that this metal was not only no longer used as a method of exchange, but was also dispensed with as a material for the manufacture of coins.

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We consulted with the AI ​​that led to this happening and what were the key events that influenced its disuse.

The use of gold and its decline

Throughout history, gold has played a key role in the global economy. Civilizations such as the Egyptians, Greeks and Romans They used gold to mint coins and facilitate trade.

However, as monetary systems evolved, the practical limitations of this mineral began to become apparent. Among them, that It is expensive to extract and processand its limited supply makes it difficult to use to meet the needs of a growing economy.

According to artificial intelligence, during the 19th century gold became the main basis of a system in which the basic unit of currency was backed by a fixed amount of this material. This mechanism was better known as the Gold Standard.

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Under this model, countries agreed to convert their currency into gold at a fixed price, which facilitated international trade and exchange rate stability. However, factors such as World War I, Increased demand and restricted flexibility to expand the money supply caused it to gradually enter into decline.

The tool highlights as a key moment for its collapse the Nixon shock, a series of changes carried out by US President Richard Nixon to the economic and foreign relations policies of the United States government in 1971 in response to rising inflation.

That year, President Nixon suspended direct convertibility of the dollar into gold due to economic pressures, trade deficits and a decline in US gold reserves That decision ushered in the era of floating exchange rates and completely fiat currencies, that is, those backed by the trust of the issuing government.

The use of gold as a material for making coins was discontinued mainly because its production was too expensive. By replacing gold with less valuable metals such as copper, nickel or alloys, governments significantly reduced production costs.

In fact, most countries began to reduce their circulation in the late 19th and early 20th centuries, especially after World War I. To give you an idea, The last gold coin for general circulation in the United States was minted in 1933.

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Gold

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And today?

In the financial field, gold is the safe haven asset par excellence, thanks to the fact that it tends to retain its value even in situations of uncertainty. In this sense, central banks and investors hold this asset as a protection.

This metal, in addition, It remains highly valued in jewelry making and has industrial applications in electronics and medicine. AI also highlights that gold coins are still minted today, but they are intended for the investment and collecting market, not for general circulation.

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