By JOHN STEELE GORDON for Barron’s

BECAUSE GOLD IS CHEMICALLY INERT, it doesn’t tarnish and it has few industrial uses. Because it has been a prime store of value for millennia, it has always been very carefully guarded. Because it is so extraordinarily valuable (a cubic inch of pure gold is currently worth more than $9,000), even long-lost gold is searched for diligently.

A hundred and sixty years ago this month, for instance, James Marshall was inspecting a new millrace in Northern California that he had just constructed for his employer, John Sutter. A pebble about half the size of a pea caught his eye. “It made my heart thump,” he later remembered, “for I was certain it was gold.”

In 1847, the United States had produced a mere 43,000 ounces of gold, mostly as a byproduct of base-metal mining. In 1853, California alone would produce more than three million ounces, then worth some $65 million. The total revenue of the federal government in 1853 was $61.5 million. Read Full Article