Gold Discovery and Prices

The supply of gold controlling currency in circulation had the potential to grow sharply and unexpectedly with discovery. After the California gold rush in the 1850s there was a lean period where the supply of gold remained stable. The consequence was that the prices of commodities dropped on a global scale. This hurt both producers and debtors, which especially hurt farmers. Critics of the gold standard began to champion including additional precious metals to expand reserves. 

Then, in the 1890s, two gold prospectors in South Africa discovered a gold-bearing reef, which would prove to be "an outcrop of the largest goldfield in the world." A few years later gold production had jumped by 50%, bringing the gold drought to a swift conclusion and making South Africa the world's largest producer of the precious metal. "Prices for all goods, including agricultural commodities, once again began to rise."

Source: Liaquat Ahamed | Lords of Finance: The Bankers Who Broke the World | 12/29/2009 | p. 14 | Visit

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