The History of an Obsession. Gold itself has lost a lot of its luster compared to just 70 years ago when most of the world currencies were on gold standard. Governments, at that time, could redeem the paper dollars for gold. The United States, however, continued to exchange gold for dollars until 1971. From 2700 BC to 1971, gold was at the heart of people's concept of money.
Today there is no official connection between currency and gold.
Money is backed by the economic wealth - the gross domestic product of the nation, not by gold bars held at Fort Knox. Yet, in some circles, it seems to still be an obsession. We still seem to have a fascination with gold, and for some reason, may still feel that need to accumulate gold. But gold as an investment is likely to continue to be volatile. As much as it has captured our imagination for thousands of years, I believe we need to think hard before we make gold a significant part of our investment strategy or portfolio.