Gold - it continues to glisten - new High of $4,222 - aiming at $4,500 then even $5,000 an ounce

Going to $5,000 an ounce?

Mark Watson-Mitchell - 16.10.2025

When Napoleon escaped from Elba in 1815 and returned to France, he began to assemble an army.

The price of gold was then equivalent to £4.32p an ounce; however, it leapt to £5.35p overnight on the back of extraordinary demand.

The London Bullion House of Mocatta & Goldsmid declared that the big buyer was Nathan Mayer Rothschild, acting on behalf of the British Treasury.

His orders were to dispatch the gold quickly to the Duke of Wellington.

Not until Napoleon was defeated at the Battle of Waterloo did the gold price simmer down.

Iran's frozen assets

In November 1979, the US froze Iran’s assets, which occurred just a few weeks before the Soviet Union invaded Afghanistan.

Between late January 1980 and the following two months, the price of gold rose from $400 an ounce to $850.

After Iran’s assets were unfrozen and it became evident that the Soviet Union was hopelessly tied up with Afghanistan, the price fell back to the $400 level.

Hedge in times of War

In times of war, economic uncertainty and geopolitical instability, buying gold makes more sense than anything else.

Gold has proven itself to be the enduring talisman for troubled times.

As Disraeli said: “More men have been knocked off balance by gold than by love”.

For well over 6,000 years, men and women have fought for it, died for it, cheated for it and slaved for it.

Brazilian?

The first gold rush of 1697 brought gold from Brazil to London, partly transported by Moses Mocatta on ships owned by the East India Company, which held a Royal Charter granted by Queen Elizabeth I.

This influx of gold led to a demand for a purpose-built London vault, which the Bank of England duly established.

Their 'bullion warehouse' served the entire European market and was further stocked by the inflow to London from the subsequent gold rushes in California, Australia, and South Africa.

The refineries established to process this gold were situated near the Bank of England, which played a crucial role as a custodian, regulator, and facilitator of lending and gold sales by other banks.

In 1750, the Bank set up the London Good Delivery List, which formally recognised those refineries that produced gold bars of a certain standard and could therefore be allowed to enter the London market.

Today, this list is regarded as the only globally accepted accreditation for the bullion market, ensuring that the wholesale bullion bars traded in the market meet the standards and quality required by the 'Good Delivery' standard.

The Golden Ring

By 1850, the five companies—N M Rothschild & Sons, Mocatta & Goldsmid, Pixley & Abell, Samuel Montagu & Co., and Sharps Wilkins—150 years later, would form the London Gold Market Fixing Company, which was already established and flourishing.

The term London Gold Market refers to these five companies that formed to oversee the operation of the gold market in London.

In 1919, it set up the first Gold Price fix at Rothschild's offices.

The fact that London was at the centre of international time zones has always facilitated it being the perfect place from which to operate the market.

Among the largest gold vaults

The world’s trade in bullion is London-based, with a global reach of activity and participants.

Today, the Bank of England has one of the world’s most extensive gold vaults and is the second-largest custodian of gold in the world, after the New York Federal Reserve.

The Old Lady’s vaults hold over 400,000 bars of gold.

It also provides secure custody for the United Kingdom’s gold reserves and for those of other central banks.

This supports financial stability by providing central banks with access to the liquidity of the London gold market, which is the global centre for gold trading.

What is gold mining?

Gold mining is the extraction of ore, metal-rich rock, from the earth’s crust.

Some 65% of the world’s gold production comes from surface mines, with the balance from underground gold mines.

Mine production accounts for the most significant part of the gold supply – typically some 75% each year.

Demand is higher than supply

But the annual demand is higher than the supply and the shortfall is made up by recycling.

The majority of recycled gold, some 90%, comes from jewellery, with gold extracted from technology providing the remaining 10%.

The Top Ten largest producers of gold are (in approximate 2024 tonnage): China - 380; Russia – 295-330; Australia – 320; Canada – 180-200; United States – 160-200; Peru – 167; South Africa – 157; Finland – 130; Mexico – 122; Guyana – 114; and Brazil 92.

Largest holders of gold reserves are: the United States - 8,133 metric tonnes; Germany – 3,350; IMF – 2,814; Italy – 2,452; France – 2,437; Russia – 2,326; China – 2,302; Switzerland – 1,040; India – 880; Japan – 846; Turkey – 639; Netherlands – 612; and Poland – 515.

The UK holds 310 metric tonnes, which is a mere 17.1% of our foreign exchange reserves, the US is 78.7%, Germany 78.6%, France 75.9%, Italy 74%, and Netherlands 69.1%.

Carats for purity

The purity of gold is measured by its fineness (parts per 1,000) or by the carat scale. Pure gold (1,000) is 24 carat; London Good Delivery is 995.

Most coins are 916 or 22 carat, whilst high-quality jewellery is 750 or 18 carat.

In the UK 9 carat (375) is the minimum accepted for the metal to be legally classed as gold.

By the way, the term carat derives from Greek and Arabic words meaning ‘the fruit of the carob tree’, the seeds of which were known for their consistency and used to balance the scales used by merchants at ancient bazaars.

Melt value

The weight of gold is customarily measured in troy ounces, which is the equivalent of 31.10 grams.

A kilo-bar is 32.15 oz. troy, and 1 metric ton is 32,150 oz. troy.

When buying bullion coins or collectable coins, ask for the ‘melt value’ – the basic intrinsic bullion value of a coin if it were melted and sold. Always get an independent appraisal of the specific gold product that you are considering.

Consider additional costs such as insurance and safe deposit boxes which will cut into the investment potential.

When purchasing gold stored in a third-party security facility, take extra precautions to ensure that the metal exists, is of the quality described, and is adequately insured.

A wise investment

Gold bullion is the ultimate insurance and, given its ability to maintain a high value, should be viewed as an essential part of everybody’s investment portfolio.

Here are some of the many reasons why buying gold is a wise investment.

Gold offers about as much certainty as you can get and bullion, unlike other investments, will always hold a value.

Gold bullion is an effective way to hedge against other investments, as its value tends to be particularly resilient when other investments, such as stocks and property, are under-performing.

Gold can also be used effectively to insure you against other economic factors such as inflation and deflation, interest rates, stock market jitters and currency problems.

Importantly, as a highly precious metal, gold's worth is recognised internationally, and is considered highly valuable no matter where you are in the world.

An additional convenient and positive aspect is that gold bars and gold coins can be easily taken with you wherever you go.

Unpredicatability drives demand

The unpredictable nature of the UK economy and the Eurozone, particularly since Brexit began, suggests further long-term strength and likely increases in the global gold price.

However, these potential profits should not be the primary reason for investing in gold.

Bullion should be viewed as a non-speculative, safe, long-term method of safeguarding your wealth.

Gold portfolio investing

Owning gold offers a unique and interesting element to your portfolio, offering an opportunity to spread the risk from the uncertainty of other investments such as stocks and shares, property, and currencies, which may be under-performing.

Gold's bear market hit the bottom at the end of 2015, and the gold price soared in 2016 spurred on by economic and political uncertainty caused by events such as the Brexit referendum result and Donald Trump's election.

The price continued to rise into 2017 with tensions between the USA and North Korea over nuclear missile testing, but by the end of the year the Cryptocurrency bubble was stealing the limelight from gold, shortly followed by a stock market boom to welcome in 2018.

This bubble continued until March but now, at the start of June 2018, we see stock markets stalling, currencies growing more and more volatile, and gold prices climbing up once more, proving that you can't stay away from gold for too long.

The gold price tends to rise as investors in other markets get the jitters, but the big question is what happens next?

No guarantees

As with all investments, there are no guarantees, trends will continue.

A rise in gold prices doesn't guarantee it will continue to rise for months to come.

By conducting your own research and keeping an eye on the news and current affairs, you can learn about what triggers a rise or fall in the gold price and act accordingly with these developments.

Buy gold primarily as a safeguard for the future, and secondly as a profitable investment.

If you believe that the current economic difficulties will continue down the same road for some time to come, then the gold price is likely to remain high and continue to rise.

Whether you’re new to bullion investment or not, deciding whether to invest in bullion bars or bullion coins should take some consideration.

Before making this decision, it would be advisable that you conduct your research, as there is no definitive right or wrong answer; it will vary depending on the needs and circumstances of the individual investor.

However, as with making any other investment, there are several factors to consider, including the value of your investment and the product premiums, how long you plan on keeping it, where to store it, capital gains tax (CGT) and how you plan on realising the value of your investment.

Gold coins

Gold coins are available in a variety of sizes such as 1oz, 1/2oz, 1/4oz and 1/10oz making them highly versatile, easy to store and ideal for trading if the banking system did ever collapse.

Among popular gold coins, the renowned South African Krugerrand is known for having the lowest premiums, making it ideal for smaller and first-time investors.

Alternatively, British bullion coins like the gold sovereign, half sovereign and gold Britannia are perfect for coin investors who hold a large amount of money in gold bullion due to their CGT-free status.

It is advised that small and first-time investors look into both coins and bars, despite coins being the obvious choice for lower-value investments.

Storing Bullion Bars and Coins

Whether you are investing in one 1-kilo gold bar or approximately thirty 1-oz gold coins, the gold size and mass would be nearly identical; however, one would be easier and more convenient to store than the other.

The 1 kilo gold bar is a single unit; therefore, you would be confined to storing it in a single location, a deposit box, or part of your home.

However, with thirty 1oz coins, you can split your investment; for example, ten in a deposit box within your bank, ten in a family member's safe, and ten hidden around your home, thereby keeping them physically accessible.  

If you have a small investment, then you may not have access to a deposit box; therefore, simply storing your bullion creatively within your home may be the best option.

However, it is worth noting that silver bullion, due to its value being substantially lower than that of gold, is much more difficult to store than gold.  

Gold has been used as a form of currency since 643 BC.

That gives people an emotional feeling that it will hold its value better than paper currency.

However, gold hasn't been used as money since President Nixon removed the world from the gold standard in 1973.

Second, the physical supply of gold is relatively inelastic in the short term with regard to price. It means the supply will not increase even if the price does.

That's because gold must be mined, and it takes a long time to find new mines and get the gold out of the ground.

Limited supply makes the gold market both thin and volatile when demand grows sharply.

That means there are few traders, and they have a lot of influence in the market.

They can drive prices up quickly once it looks like there is an upward trend.

At a certain point, gold can quickly become a bubble.

When the bubble bursts, you can lose a bundle.

Gold, more than any other investment, has the traits to become an asset bubble. Why?

According to commodities guru George Soros, it's very difficult to determine its real intrinsic value. Stocks have underlying earnings, and real estate has rental equivalents.

The only underlying value of gold is its cost to mine.

Even that is difficult to determine since miners say it's anywhere between $800 to $1,500 an ounce.

Before gold was used as coinage, its value was recognised.

Gold jewellery is buried in the Tomb of Djer, king of the First Egyptian Dynasty.

Gold's beauty, lustre, and malleability made it perfect for many uses.

In fact, the Egyptians became masters in the art of beating gold into leaf.

Gold was first used as a standard in 643 BC when the precious metal was used for coinage.

In 30 BC, the Roman Emperor Augustus set the price of gold at 45 coins to the pound.

Its value steadily increased since then, reaching a peak of $4,222 an ounce in mid-October 2025.

(Sources of information and comment that should be credited include: the Bank of England; the World Gold Council; Gold.co.uk; Bullion By Post; Forbes; Gold Price; Quartz; OANDA; Timothy Green; and the US Federal Trade Commission).