Gold as a decorative and symbolic substance has been around for a very long time. Herodotus, who visited the Scythians sometime during the 5th Century B.C., told of the burial customs of these warlike nomads. After a long trip through scattered encampments where his survivors lacerated their own bodies in grief, the corpse of the Scythian king would be laid in his tomb:
Then they strangle and bury in the remaining space of the tomb one of the kings' mistresses, his cup-bearer, his cook, his horse-keeper, his attendant, his bearer of messages, and also horses, and a first portion of all things else, and cups of gold; for silver they do not use at all, nor yet bronze in burial.
Much later in recorded history, and after Peter the Great (1672-1725) founded the first museum in Russia in 1714, Russian archaeology came into the world with the settled intention to continue the work that their beloved monarch had begun. By the beginning of the century that followed, Russian archaeologists had discovered exciting evidence of what Herodotus had reported twenty-four centuries earlier.
When a stone burial vault was discovered in southern Russia, the archaeologists were both stunned and delighted to discover the tomb's royal resident was arrayed next to his wife or mistress much as Herodotus had described:
Around his neck the chieftain wore a magnificent gold torque ending in figures of Scythian horsemen...[and] other precious objects such as an iron sword in a gold sheath... Like her husband, the chieftain's wife had been buried in luxurious clothes decorated with small gold ornaments.
Since discovering this forgotten king (1830), many similar burial sites with gold objects have been discovered in the lands of the Ukraine to the north of the Black Sea on the broad steppes where the Scythians roamed.
In a much more timely use of gold, the Chinese government recently announced that it would be adding more than 400 tons of gold to its monetary reserves. Whereas the ancient Scythians used gold largely to send a beloved ruler and his wife well dressed into the spirit world, the world's fastest growing economy in the early 21st Century is using gold to diversify its financial reserves.
As Asia Times reported:
The [China's] 8 percent growth target has remained the same since 2004 and is also widely seen as politically necessary to create enough jobs to stave off social unrest. While the world's largest economy - the United States - struggles to stem the bleeding of jobs in its ailing economy, its biggest creditor - China - has been quietly increasing its gold reserves in an apparent effort to hedge the weakening value of the U.S. dollar and stabilize the value of its massive foreign exchange (forex) reserves.
One of the key issues that Chinese leaders will have to tackle is whether to let the yuan rise to help restructure the domestic economy and rebalance the global economy. If they decide to allow the yuan to appreciate against the dollar and other currencies, gold may increasingly become an attractive alternative to include within the basket of China's reserves.
Note: This article was contributed by Jon Amsden, Ph.D, author of "The New Gold Rush"