History of Gold

Gold (Sanskrit jval, Greece χρυσος = chrysos, Latin aurum, an ancient English gold) has been known as a very valuable since the prehistoric era. Egyptian hieroglyphs (2600 BC) said metals and gold have stated several times in the Old Testament (Eng. Old Testament). Exploration of Europe (at the time of European exploration) to the Americas promoted by the various news that stated that gold decoration materials used freely among Native Americans, especially in Central America, Peru, and Colombia.

Gold has long been regarded as the most precious metals, and its value has been used as an expert for many currencies in history. Gold has been used as a symbol of genuineness, high value, sovereignty, and even more so the role of linking these traits.

The main declaration alchemists was to produce gold than other materials, like carbon - possibly through the act of revenge tales with similar material held by the philosopher's stone. Although their efforts have never got results, but experts have raised the interest of alchemy involves elements of the field, which is the principle to the field of chemistry today. Their symbol for gold is a circle with a dot in the middle, which is a symbol of the sun in the field of astrology.

During the period of the 19th, the troop movement caused the discovery of gold-if 'sake only apply when a build-up of gold found, including in California, Colorado, Otago, Australia, Black Hills, and the displacement rollicking Klondike.

As metals other valuable thing, gold is considered by troy weight and if he is compared with other metals rust words used to indicate the quantity of gold present, 24 karat is pure gold. History shows that free gold was used to bolster the currency in gold rating system that was held in which one unit of currency is the same with some heavy amounts of gold. In this system, the kingdom and the central bank tried to guard the gold price by putting the values ​​they want to change with the currency.

For so long gold value placed by the United States at a price of $ 20.67 per troy ounce, but in 1934 this value is set at a price of $ 35.00 per troy ounce. Caused a crisis of gold on a Mac 17, 1968, a scheme for laying the price of two rankings were introduced in which the gold is still more used to manage accounts between nations on the old value of $ 35.00 per troy ounce ($ 1.13 / g) but the price of gold in the market an individual is justified to have fluctuated . In 1975 the two ranking systems is ignored if the gold price is justified to have fluctuated. Since 1968 the price of gold on the open market has been up and down with the breadth, with a record high of $ 850/oz ($ 27.300 / kg) on ​​January 21, 1980, so to record low as $ 252.90/oz (8.131 US$ / kg) on ​​Jun 21, 1999 (Constant London) . The price of gold has risen to $ 500/oz in late 2005, because of shrinkage of the U.S. dollar and inflation due to rising energy costs.

By its usefulness as a savings deposit value, an individual gold ownership is sometimes forbidden. In the United States, an individual gold ownership except as packaging materials or collecting money shilling forbidden from 1933 to 1975.

As a visible resurfacing, gold is sometimes held as a partial rather than a portfolio because of the long-term future of gold has had a long history in determining its value. Gold becomes more attractive in times of low confidence and during hyperinflation because gold is worth perpetuating hollow although if money becomes worthless. Trade contract is based on the presence of gold is now lent by various exchanges around the world.

Gold, in the history of the world economic system, has been known since 40 thousand years before Christ. It was marked the discovery of gold in the form of pieces in Spanish, which was used by paleiothic man. In another of history mentioned that gold was discovered by the ancient Egyptian society (circa) 3000 years BC. Meanwhile, as a currency, gold began to be used in the days of King Lydia (Turkey) since 700 years before Christ. History of the discovery of gold as a means of transaction and the jewelry is then known as the barbarous relic (JM Keynes).

The birth of Islam as a world civilization that brought and distributed the Prophet Muhammad SAW has provided significant changes to the use of gold as currency (dinars) used in economic activity and trade. At the time of the Prophet, set the standard weight of the dinar was measured with 22 carat gold, equivalent to 4.25 grams (diameter 23 millimeters). This standard is then standardized by the World Islamic Trading Organization (WITO), and valid today.

Today, the facts show that there is an imbalance of international trade activity, which occurs due to uneven mastery of world currency, and marked the rampant U.S. dollar. The condition was later compounded by the emergence of the Euro as common currency of European countries. The fact also shows that Muslim countries have very high dependency on both the currency, mainly U.S. dollars. In fact, in current international trade transactions, the U.S. dollar controlled almost 70 percent as a means of world transactions (Azm Zahid, 2003).

With the establishment of the World Trade Organization (WTO) on 1 January 1995 as the implementation of the implementation of the General Agreement on Tariffs and Trade (GATT) and the Uruguay round, then be a consequence of trade liberalization that can not be circumvented. Of course, all countries must be prepared to engage in this global scenario, including developing countries that in fact the majority of Muslims. The big question which then must be answered is how much impact and benefits to be achieved by the Islamic countries in the international market.

The author argues that the idea of ​​the appearance of gold as a tool in international trade transactions is actually an answer to reducing dependence on Muslim countries against the dominance of these two world currencies (U.S. dollars and Euros). In addition, this idea can also be used as a tool to minimize speculation practices, uncertainty, debt, and usury. Especially that had occurred in activity in the money market, where it occurs as a result of the use of paper money (fiat money), so that it becomes a dilemma for Islamic countries. The authors believe, the commitment to use a common currency with the start of trading transactions, will provide many significant benefits.

The use of gold as a tool of international trade transactions can be done through bilateral payment agreements (bilateral payment arrangement) as well as multilateral payments agreement (multilateral payment arrangement). Payment agreement that traded products will go through the stages and mechanisms involving commercial banks, central banks, and custodian of gold (gold storage).

There are four stages in the mechanism through which such transactions. First, the existence of trade agreements between importers and exporters who are in two different countries, with clarity condition of the goods and the amount of goods to be transacted. Of course, in accordance with Islamic law, the contract has to be free from elements gharar, maysir, and riba.

Second, after making a trade agreement, then the importer will issue letters of credit (LC) to make payments through banks that have been designated. Furthermore, the exporter will receive a letter of credit (LC) from the bank. Third, the bank appointed by the importer shall immediately make payment to the central bank by using the local currency, which then accumulate the transaction between the two countries with the gold standard until the clearing.

Fourth, after the clearing is completed, the importer country's central bank will transfer the gold worth of trade transactions between the two countries to the gold custodian who has been appointed, to subsequently handed over to the exporter country's central bank. Exporter country's central bank will now be making payments in local currency to the banks that have been designated by the exporter. Then the banks will turn them over to the exporter.

Above mechanism has obvious advantages compared with using other currencies. The two countries will not experience fluctuations in currency values, which often become barriers to trade transactions. In fact, many facts which indicate that currency fluctuations may result in the destruction of a country's economy. With the same mechanism, the stability of the economy will be more easily achieved, given the relative value of gold is more stable. It is expected, the volume of interstate commerce for Islam to develop. This is where the required role of the OIC and Islamic Development Bank (IDB) in order to formulate a more mature concept of this idea. Political gains will be felt by Islamic countries, because the value of its bargaining power against the West and other forces become increasingly high. Nevertheless, it must be admitted that this mechanism also has weaknesses. The first weakness, the availability of gold is not evenly distributed among Islamic countries, which can cause imbalance and inequality.

The second weakness, the high dependence of the Islamic world against products produced by the countries non-Muslims (read: West), especially on industrial products with high technology. The third weakness, the value of trade transactions is still very little fellow members of the OIC, which causes the significance of gold became less substantive. For that purpose, commitment and sincerity of the leaders of the Islamic world and its government is needed. As the largest Muslim country in the world, it is appropriate that if Indonesia is expected to play a more active, constructive, and productive. Indonesia has an opportunity to encourage the realization of the OIC trade bloc, despite challenges and obstacles are not the least, especially from Western countries through their stooges (IMF and World Bank). 

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