To determine “why is gold valuable,” it’s necessary to understand some unique principles and properties of this highly sought-after metal.
- Gold is a noble metal that’s been in use for over 6,000 years. Gold is a rare and valuable commodity that has been mined for many purposes. It’s also used as an investment because its prices are stable.
- Its chemical properties are the 79th chemical element in the periodic table (the number of protons in the nucleus is 79), and its chemical symbol is Au.
- Gold’s Atomic Weight (average mass of the atom) is 196.96. Other properties of gold are; that it has a density of 19.3 grams per cubic centimeter, a melting point is 1,947.7 degrees Fahrenheit and a boiling point of 5,162 degrees Fahrenheit.
- Gold is a transition metal and does not form part of alkaline metals.
The History Of Gold: How Did Gold Become Valuable?
Before we can understand the modern times, it is important first to know the history of gold. For example, gold was used by ancient civilizations in Egypt and Rome as far back as 8,000 years ago.
In addition, gold continued to be valued by cultures throughout history, including those who settled in Central America and South America and created great civilizations like the Aztecs, Maya, Toltec, and Incas.
These civilizations loved gold because they found it beautiful and revered its divine power in ritual ceremonies such as sacrifices or coronations.
Gold also served as money (gold coins) for these civilizations, which helped them grow economically and culturally.
Gold has also been seen as the ultimate symbol of power (e.g., gold medal) and authority (e.g., gold statues were reserved for royalty and nobility in 13th-century England).
Gold After World War II
When World War II ended, the world was trying to stabilize again, but there was a lot of debt and inflation. In 1944, at the Bretton Woods Conference, delegates from 44 different countries decided to peg the global price of gold at $35 for a single ounce of gold for at least 20 years. They also agreed to convert dollars into gold, ensuring that there was enough gold to back up all the international trade.
Gold had been used as money before, but this made it the official gold standard worldwide. This was when the U.S. dollar became pegged to gold. The purity of gold and weight also became standardized.
Gold In The Modern Day
In the modern-day, many people invest in gold for its value. Investors buy gold when they are pessimistic about the economy or stock market or if they simply want to hedge their bets against inflation.
In recent years, there has been a spike in people investing in gold because they are worried about the value of FIAT currency – such as U.S. Dollars or Euros – which are prone to inflation and deflation, respectively.
This means that when you see countries like Ecuador, China or Russia buy large quantities of gold, they’re investing in gold as part of their portfolio returns, just like any other type of investment.
As the value of paper currencies and other investments continues to decline, many people are looking for safer alternatives. The undeniable truth is that the value of gold will never be destroyed- it cannot be inflated by central banks, and governments cannot devalue it.
The price of gold is determined by the amount of new supply and demand for it in today’s economy.
Why Did Ancient Civilizations Think Gold Was Precious?
In ancient times, civilizations worldwide always had some form of currency. Gold was most often used in these times because it was rare and difficult to find. It also didn’t tarnish and changed colors as silver did.
Even when civilizations were overthrown, they would melt down their gold to keep it from being stolen by invaders. This is one of the reasons why every ancient civilization thought gold was precious – because they knew it was valuable even if they lost power or got conquered by another group of people.
Gold Psychology And Society
One reason why gold still has value is that people have made it valuable. Gold can be seen as more valuable than other metals because people perceive it as more valuable. This belief stems from the psychology of humans and their desire to accumulate wealth, tangible assets, and precious metals, along with other things.
In society, some cultures view gold as a necessity while others don’t see the need for it since paper currency can represent many forms of wealth (i.e., stocks). People in society give their loved ones gold jewelry as gifts for special occasions like weddings and birthdays due to its worth.
Why Is Gold Valuable?
Here are some reasons why gold still has value in this modern world:
- Its diverse use in medical applications (e.g., dental fillings) and the electronics industry makes it a more popular commodity.
- Gold is considered to be a store of wealth for those who have financial emergencies or for people who want to invest long-term.
- Gold value also increases during market instability because investors often use it as a hedge against inflation or during an economic crisis.
- Gold also has intrinsic value, meaning something other than a monetary gold value, such as rarity, beauty, and durability; it has been established for centuries as valuable jewelry and decoration even outside of finance or economics.
Scarcity Of Gold
All other metals are abundant in the Earth’s crust, but gold is rare. This is because it’s a finite resource and cannot be created. The amount of gold that has been mined throughout history is worth around $8.2 trillion.
This value may seem like a lot, but it’s not when you compare the value of gold to the world’s GDP, which is $75.4 trillion.
How Much Gold Is There In The World?
The world’s total supply of gold is about 192,000 tons. The United States has about 8,133 metric tons or 2.3 billion troy ounces (a troy ounce is 31.1 grams) of gold stored in the Treasury Department’s vaults.
It has been mined throughout history, with gold production peaking during the late 19th century before dropping significantly after World War II.
Today, about 155,000 metric tons of gold are available for mining that has not yet been extracted from the Earth. That represents just under 2% of all the gold ever mined throughout history.
Gold is durable because it doesn’t corrode or tarnish, and it’s chemically very stable. Gold will always be able to be used as currency because its value will never depreciate. It will always maintain its value which is why people invest in gold.
Due to its special properties, gold will keep its luster without any maintenance for centuries.
Gold is one of the most malleable metals on Earth, meaning it can be hammered and molded into different shapes while still maintaining its original composition. It can be hammered into a fragile sheet or pulled into a long wire, and it can be manipulated to form a variety of shapes.
Gold’s malleability also makes it an excellent material for jewelry. The goldsmith can form it into a wedding band that fits comfortably around your finger, and the jeweler can design any number of rings in any shape with gold.
Different Uses Of Gold
- Form of Currency: Gold has been used for centuries to purchase goods and services all over the world.
- Investment: Gold has been seen as valuable so that it can be used as an investment.
- Jewelry: The beauty of gold jewelry pieces makes it a traditional gift or important family heirloom for many people worldwide.
- Medical Uses: Some people turn to gold to alleviate their ailments because they believe the metal is good for health issues like arthritis or skin disorders.
- Electronic Components: It is applied to electronic components like gold wire and electrical connectors due to its high conductivity.
When Gold Became An Investment
Gold became an investment as soon as it was discovered. Gold’s rarity, beauty, and malleability led to it being used as currency and jewelry in many different cultures. However, people have always believed gold would hold value because of its scarcity and limited supply.
In the early 1900s, gold was seen as a safe investment because it couldn’t be printed like paper money leading to more money supply in circulation. I
n the 1930s, people mainly looked to gold to save their money when the stock market crashed, and banks failed left and right. In the last few decades, gold has become an asset of choice for many investors looking to protect their wealth.
Gold sometimes outperforms other assets, providing protection when other investments are faltering.
There are many different ways to invest in gold. For example, you can buy physical gold, buy gold stock in gold mines, or even buy shares of an ETF (Exchange-Traded Fund) that tracks the price of gold.
Physical gold is what most people think about when they hear about investing in precious metal, and this is called “physical” because you are buying actual pieces of the metal with no strings attached.
If you invest in a company that mines gold and sells it on the market, it’s called “paper” because, technically, you never own any physical pieces of the metal. An ETF is also paper, but since they are traded on an exchange like stocks, they’re easier to trade than physical and paper investments.
Why Do Gold Prices Fluctuate? These Factors Affect Gold Prices
The market determines the price of gold and goes up and down based on many factors. The most common factors that influence gold prices are listed below.
- Gold demand and supply: The price of gold goes up when there’s increased demand for it, like when there’s a lot of uncertainty in the world. Gold prices typically go down when inflation is low, or interest rates are higher because people don’t want the metal as much.
- Global market/Economic Trends: The price of gold is often driven by what’s happening with the U.S. dollar and other major currencies around the world. Historically, when the value of the U.S. dollar increases, it makes sense to buy gold because it will be worth less compared to other currencies like Euros or British Pounds.
When the value of U.S. dollars drops, people will buy more gold because it can be exchanged for more than its original value in these currencies as an investment strategy known as hedging against currency risk.
- People’s Perceptions: Regarding how people perceive gold, some think that if they have it, they’re rich, while others see it as an investment opportunity or a safe-haven asset in times of uncertainty.
- Political Unrest
- Natural Disasters
These events cause people to buy more gold as a form of protection or as an investment in uncertain times.
Who Should Invest In Gold?
Investors should consider investing in gold if:
- They want a safe store of value that doesn’t fluctuate too much but still retains some worth even when everything else crashes.
- They are thinking long-term and have a high-risk tolerance.
- They believe that the markets will crash eventually and want to hold onto something tangible instead of something digital, so investing in gold is probably a good idea.
Who Should Not Invest In Gold?
- Anyone who doesn’t have a lot of disposable income.
- Anyone who doesn’t have the time or patience to research and invest in gold.
- Anyone who has not researched gold and is not 100% sure they want to buy gold.
Will Gold Still Be Valuable In 50 Years?
Gold is much more valuable than any other metal, which means it will always have a use. The metal is so popular because it doesn’t rust or tarnish, and its color never fades. That’s why gold will likely continue to be valuable, no matter what happens in the market.
Will Gold Become Worthless One Day?
Gold is one of the most versatile metals on Earth today. It has many valuable properties that make it attractive not only as an investment but also for various uses in different industries. Gold has been around for centuries, and it isn’t going anywhere anytime soon.
There will always be a demand for gold, no matter what. Some believe that the price of gold could go even higher than it is today – and they may be right.
Reasons Why Gold Is More Valuable Than Silver
- Gold is rarer than silver.
- Gold is a better conductor of electricity and heat than silver.
- Silver tarnishes; gold does not.
- Gold is denser than silver and thus more valuable per ounce
5 Reasons Why Gold Is More Valuable Than Copper
Copper is an abundant metal, but it’s not as valuable as gold. Here are 5 reasons why:
- Gold is a precious metal, and it has been used for jewelry and coins for centuries. It was also used to make statues of gods and goddesses in the past.
- Copper is a good conductor, but gold is better at conducting electricity.
- Copper can be easily shaped into wire, pipes, or boards, but you have to smelt gold before shaping it.
- Gold is rarer than copper on Earth.
- Finally, the price of gold doesn’t change like the price of copper does over time.
Is There 8 Times Less Silver Than Gold In The World?
The most common misconception about gold is that there is eight times less silver than gold globally. In truth, there is a lot of uncertainty about how much silver exists in the world.
It’s hard to know the exact number of silver and gold, but there is no significant difference between their relative quantities.
Reasons Why Gold Is More Expensive Than Aluminum
Gold is more expensive than aluminum for several reasons.
- Gold is a rare metal that is resistant to corrosion and tarnishing.
- It’s also resistant to wear and tear. On the other hand, aluminum is not resistant to wear and tear as it can be scratched relatively easily with any material or object.
- Gold is also very malleable, meaning it can be shaped into many different metals or items without breaking or shattering as aluminum would do.
Is Iridium More Expensive Than Gold?
Yes, Iridium is more expensive than Gold. Iridium is a naturally occurring element that is rarer than gold and platinum. It’s mainly used in industrial applications, e.g., spark plugs or an alloy for jewelry. The metal is about three times as expensive as gold and about 18 times the price of silver.