Why is gold valuable? Does it have real value or is its value simply made up to get you to spend your hard-earned money? Welcome to yet another interesting post in which we shall be taking a look at this popular precious metal and what makes it precious and valuable. If this sounds interesting to you, read on to find out more.
If you were to do a random Google search about gold, you will come across very many articles talking about how this precious metal is useful as a financial investment. Even so, you will come across those who also argue that gold does not have any intrinsic value, and actually describe it as a barbaric relic that has no place in today’s world of investments.
Their belief is that today, paper currency should be viewed as being of standard value, and that gold’s worth can only be found in the manufacture of jewelry.
There are also those who come out strongly in support of gold, praising it for its intrinsic properties that contribute to its uniqueness. They, as such, view this precious metal as a must-have asset in their investment portfolios (mostly the long-term ones).
The duplicity in the perception of gold
Most people would not deny that the value of gold is attached to its various uses, including how it is used in jewelry, currency, as well as an investment. In addition to these substantial sources of value, however, there is another aspect of gold that’s also harder to simply point out – its mystery. The appeal that gold has is to a great extent attributed to its mystery.
Now, I know that in the world of finance, not many investors would be very confident throwing around words like ‘mystery”. This is despite the knowledge that with most of the other well-known disciplines, there’s a place for science, art and mystery.
As far as we can tell, gold can in one way or another stimulate a subjective personal experience, and can at the same time be objectified through adoption into the system of exchange. Such duplicity is quite unique to gold as a commodity.
In some instances, gold can be used as a tangible currency, while in others, it can embody value that lies in human psychology as is evidenced by when someone simply says that they own one or several bars of gold.
The place of gold in today’s society
If today’s economy came to a standstill, gold would not be useful immediately, since most people would mostly look for ways to sustain their basic needs. Eventually, however, gold would become quite useful.
Human beings are organized as pack animals, and we prefer to live as a community as opposed to being completely independent. It is way easier for people to work in groups than to attempt to live on their own.
Such is a human trait that forces us to come up with ways to work together, which in turn leads us to establish ways to exchange goods and services that are efficient.
Within a collapsed economy, gold offers the much-needed comfort of sustainability. Gold is the logical choice of exchange within a system that no longer has a place for paper currency. If, God forbid, that happens today, we would all revert to using gold. Arguably, gold is one of the few substances on the entire planet that offer the promise of long-term sustainability.
Now, we do know that gold may not have the immediate physical value that its owner may need. One cannot dine on a bar of gold or chomp down their gold bullion. If, however, the society agrees that gold should be turned to coins and used as a means of exchange, any man can purchase themselves a house to live in, and a nice warm meal.
Even our ancestors revered gold
Faced with the challenge to implement a system of trade that was more efficient than barter trade, our ancestors chose coins to be mediums of exchange. There had discovered and put to use many metals in their days, but there was something about gold that made them want to place more value in gold coins.
This was despite the fact that they had already discovered other metals including iron, platinum, palladium, copper, lead, and aluminum.
The problem with these other metals, however, is that they are prone to corrosion over time, and would as such not be the best option for the storage of value over time.
Trying to keep coins made from these metals from corroding would also be very labor-intensive. Aluminum, on the other hand, is quite light, and would not be very ideal for the creation of coin that invokes a feeling of long-term security.
Platinum and palladium
Platinum and palladium are worthy choices since they are mostly non-reactive, and can are not prone to extreme corrosion. They are, however, very rare and cannot generate enough coins to circulate the entire world.
For the society to assign value to a particular metal, it has to be somewhat rare to the extent that not many people can access it to produce coins, but it also needs to be a metal that’s not extremely rare, to the extent that it cannot produce enough coins for use in commerce.
Gold and silver are two metals that have found their use in the creation of coins, owing to their beauty, and how they do not corrode. The two metals have also played a very important role in the production of timeless jewelry pieces.
As much as silver can be polished and textured in a variety of ways, in a bid to attract those who are meant to purchase it, its appeal cannot come anywhere close to that of gold.
Unlike any other metal on this planet, gold naturally possesses a unique array of colors. It also has a quality of absorbing light, and seemingly making its own shine from within.
As physics has it, the atoms in gold happen to be particularly heavier than those in other precious metals. This makes its electrons move faster, hence allowing for more light to be absorbed into gold which in turn gives it its lustrous appearance.
Get started on your journey to investing in gold by opening your tax-advantaged gold IRA today.
That will be all for this post in which we have discussed why gold is valuable in today’s financial world. I hope that you found this post helpful and useful, and that you can now say a thing or two about this subject. Let me know if you need any help or guidance with getting started with gold investments today – drop your question in the comments section and I will get back to you ASAP.
I wish you well,
Eric, Investor and Team Member at Gold Retired!