Background History
Background History
Following the California gold discovery of 1848, North America became the world's major gold supplier; from 1850 to 1875, more gold was discovered than in the previous 350 years. By 1890, the gold fields of Alaska and the Yukon were the principal sources of supply and, shortly afterwards, discoveries in the African Transvaal indicated deposits that exceeded even these. Today, the principal gold producing countries include South Africa, the United States, Australia, Canada, China, Indonesia, and Russia.
The United States first assigned a formal monetary role for gold in 1792, when Congress put the nation's currency on a bimetallic standard, backing it with gold and silver.
During the Great Depression of the 1930s, most nations were forced to sever their currency from gold in an attempt to stabilize their economies.
Gold formally reentered the world's monetary system in 1944, when the Bretton Woods agreement fixed all the world's paper currencies in relation to the U.S. dollar which in turn was tied to gold. The agreement was in force until 1971, when President Nixon effectively cancelled it by ending the convertibility of the dollar into gold.
Today, gold prices float freely in accordance with supply and demand, responding quickly to political and economic events.
Gold is a vital industrial commodity. It is an excellent conductor of electricity, is extremely resistant to corrosion, and is one of the most chemically stable of the elements, making it critically important in electronics and other high-tech applications.
A broad cross-section of companies in the gold industry, from mining companies to fabricators of finished products, can use the COMEX Division gold futures and options contracts to hedge their price risk. Furthermore, gold has traditionally had a role in investment strategies, and gold futures and options can be found in investors' portfolios.