The story of American gold coins begins with gold itself. Gold was one of the first elements discovered by Man, thanks to its distinctive, yellow color and metallic luster. Gold is a relatively inert metal, meaning that natural deposits enjoy a high level of purity. Gold is most commonly found mixed with quartz as veins and crystals, although other forms are known. Erosion of the earth creates what are known as placer deposits, where gold is exposed and concentrated in the form or dust, flakes, and nuggets. Placer deposits usually occur along the bed of a river, where the bright, yellow glint of gold caught the eye of early man.

Man soon discovered the interesting and useful qualities of gold. Pure gold is soft, malleable (easily hammered into any shape), and ductile (easily pulled into wires or hammered thin). Pure gold does not rust or tarnish, thus it retains its natural beauty, luster, and color throughout the ages. And, gold is rare, making it perfect as a store of value and a medium of exchange. Gold is used as money, in jewelry, as an electrical conductor, as a coating, and in innumerable other ways and fashions.

The value of gold derives from its desirability, its utility, and the amount of effort required in obtaining and processing the natural ore. Although more and more gold is being mined every day, demand for the metal has kept pace. As of this writing, uncertainty about the U.S. dollar and the American economy has driven the price of gold to highs not seen since the early 1980s.

However, it is important to understand that the volatility of the price of gold is not due to the supply but to the strength or weakness of the currency to which it is tied. The real purchasing power of gold coins has remained virtually identical throughout history (to illustrate, one can guesstimate that an ounce of gold purchased the same number of loaves of bread a thousand years ago as it does today). The same cannot be said of paper money, because paper money has no intrinsic value and can be reproduced with ease.

Because pure gold is so soft, it is impractical for use as everyday money. Thus, certain other metals are alloyed with it to give it strength. The earliest American gold coins contained 91.6% gold and a mixture of copper and silver to make up the balance. If the silver content exceeded that of copper, the coin took on a greenish hue. If the copper content exceeded that of silver, the coin took on a more yellow appearance and, over time, would take on a reddish hue because of the oxidation of the copper. In 1834, the content of all American gold coins was changed to 90% gold, with copper and silver making up the additional 10%.

Gold has served as money or established in the monetary value of currencies longer than any other material. The use of gold coins was widespread in Europe by the fourth century B.C.
The earliest coins circulated in the United States were foreign coins, mostly silver and gold, brought from Europe. The Coinage Act in 1792 established an independent monetary system with the dollar as the basic United States monetary unit containing 24-3/4 grains of fine gold, based on the world price of $19.39 a troy ounce (480 grains). Congress changed the gold specification in 1834 and again in 1837, when it set the dollar price of gold at $20.67 an ounce.

In 1934, U.S. Citizens were prohibited from holding monetary gold in the United States; this was extended in 1961 to gold held abroad as well. The dollar price was ste at $35 per ounce in 1934. Use of gold in international trade was further restricted as the price rose. The government revalued it at $38 per ounce in 1972, then $42.22 in 1973. It has fluctuated widely over the past few years. All restrictions on holding gold were removed on December 31, 1974.