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January 2, 2020 | 3 Timeless Gold Lessons from History

Sean Brodrick

Sean is the natural resource analyst for Weiss Group. You can read his thoughts on gold, oil, cannabis, uranium and other natural resources at EdelsonInstitute.com

The story of gold, along with the story of all metals on earth, begins 4.6 billion years ago. That’s when a giant star — a real colossus — burned through its last joules of fuel and erupted in a burst of raw energy and heavy metals.

The star was composed primarily of hydrogen with a dash of helium. Those are the original building blocks of the universe. And as stars burn first through their hydrogen and then their helium, they transform those elements into lithium, boron, beryllium and carbon.

After burning up all that fuel, most stars graciously dim into white and brown dwarf stars. Some bigger ones will burn even their waste elements, creating others in the process — nitrogen, oxygen, fluorine, neon, sodium and magnesium. Soon, even these hulking stars dim their lights.

But not our colossus.


 

It was one of a rare breed of super-giants that burns even these other waste elements, and in the process make sulfur, silicon and a whole host of other elements. And then it made iron.

Ah, iron!

Iron is the last-ditch fuel of a stellar leviathan. After burning their other elements, truly massive stars will then transmogrify their cores into iron in the time it takes to put out a daily newspaper.

But that’s when those giants hit a wall.

The Death Scream of
a Stellar Drama Queen

Iron isn’t a good fuel. The star of our story suddenly found itself without the energy to support its massive size. That’s when our giant star collapsed in on itself — shrinking tens of thousands of miles in a matter of seconds. That collapse crunched the atoms in the core, stripping and compacting them into new forms.

But our giant star wasn’t done.

Like any stellar drama queen, it knew how to make an exit. It EXPLODED with the brightness of a billion stars.

The force of that supernova took the swirling soup of protons, neutrons and electrons in the star’s core. And, using all that leftover iron as a building block, it created the higher elements — including cobalt, nickel, zinc, silver … and gold.

These elements were flung outward, riding the wave of the star’s death like the devil’s own surfers.

These newly born elements, including gold, rode the wave out into space, only to find they weren’t the first. At least one and perhaps two stars had previously gone supernova in our neck of the galactic neighborhood, and the detritus of their explosions lay in path of the supernova like flotsam in the path of a tsunami.

So, this wall of energy and matter collided with the dust particles from the previous supernovae, and the whole mess swirled into a super-heated cloud. This cloud got its own momentum mojo going and became our sun.

Clouds of dust circling the sun began to accumulate, and the rocky inner planets — Mercury, Venus, Earth and Mars — were born. The outer planets — Jupiter, Saturn, etc. — are mostly failed stars, formed when gas ejected from the sun’s birth pangs clotted together. They don’t fit into our story, the story of gold.

So, Earth formed and coalesced into its basic shape 4.5 billion years ago. It was a mess, a soup of disparate elements. But soon, molecules of like-minded elements began clotting together and formed deposits.

And some of those deposits were gold.

The Restless Earth

We’re still not done with the story of gold. Some of those deposits lay deposited in nice piles, either buried nuggets or placer deposits left behind by water action. Such deposits are rare.

More gold is buried deep beneath the surface of the earth … so deep that you’d never find it. That is, you wouldn’t find it if the Earth were quiet.

But the Earth is restless, and if you did time-lapse photography over millions of years (well, you’d need a heck of a lot of patience), you would see the Earth’s surface move and crack and fold on itself.

Through those cracks, the boiling-hot, resource-rich innards of the Earth bubbled to the surface, rising over and over again. And each wave of boiling hot goodness left minerals behind, trapped in the cracks of the host rock. And sometimes — though rarely — the mineral left behind would be gold.

Over time, miners learned how to release gold from its rocky prison. Hard-rock mining produces most of the world’s gold.

Sure, some molecules of whatever gold you’re wearing may have been found in a riverbed and may have once graced an Egyptian queen. After all, gold is salvaged, melted down and reused over and over again. But most of it was freed from the earth by sweat and blood and cunning artifice.

And it was probably mined fairly recently, too. About two-thirds of the world’s existing gold supply has been mined since 1950.

But How Did Gold Become Money?

The stuff found in streambeds was first used for jewelry, then merchants started using it for payments by weight, but pure gold was still very rare.

In the 7th century B.C., people in Lydia, in what is now central Turkey, started turning natural electrum, an alloy of gold and silver, into coins.

Coins made trade so much easier — the fad caught on.

Finally, around 545 B.C., a very smart Lydian king figured out how to separate electrum into gold and silver. He struck the first gold coin — and became very, very rich. You may have heard of him — King Croesus.

Lydian gold coin, source National Coin Broker

With King Croesus’ invention, gold as money was born. The world would never be the same.

Some people get hung up on the evil associated with gold. To be sure, rivers of blood have been shed over the yellow metal. Slavery, genocide and naked greed are all twisted into bands of gold.

But there are also the good things about gold. How many marriages have been sealed with a gold wedding band? Surely, they are countless.

Likewise, countless anniversaries, acknowledgment of years of loyalty, and joyful appreciation in lovers’ eyes have all been marked with gold. Heck, they aren’t just good things, they’re great things!

Gold would sit quietly where nature left it if people didn’t pick it up. Gold would be nothing without humanity. The truth is, we bring out both the best and worst in the yellow metal.

And historically speaking, gold’s value is surging! Even more so when you realize that paper money is being created at a ton per minute, while all the gold that can ever exist has already been created.

3 Things We Learn from Gold

Lesson No. 1: Gold is an investment for the real long term. Gold has been around for 4.6 billion years. It’s not going anywhere. So, it’s a good anchor for any portfolio.

Lesson No. 2: Real rarity has real value. People ask me why I like investing in gold. The reason is I like real wealth — hard assets. It’s all too easy for the government to print more money, or for a high-flying company to print more shares. You can’t make more gold.

Lesson No. 3: Avoid the easy-come-easy-go syndrome. Investment fads come and go, and all too often, those who get rich quickly on those fads get poor again even quicker. Gold, on the other hand, is in a big trend, and I and my subscribers are riding it for all it’s worth.

Take a look at that gold you’re holding or possibly even wearing. That gleam you see is a final spark of ancient starlight. Gold’s rarity is a fact of nature. Gold’s value is something that has existed since the first gold nugget was plucked out of a riverbed thousands of years ago.

That value — though it may go up or down — will exist as long as people walk this Earth.

All the best,

Sean

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January 2nd, 2020

Posted In: The Edelson Institute

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