Why is gold valuable?

Money know-how
28 Dec 2023
7 mins read
Written by Riona lye

Gold may seem like just another metal, but its reputation and value speak for itself. It has captured the attention of human civilisations for centuries, across continents and time periods, and it still holds immense worth today.

 

Have you ever stopped to wonder why gold is valuable? Why does gold continue to hold such a special place in our world, even in the age of modern currencies and technologies? We’re here to answer those questions and more, and to explore the many reasons why gold continues to shine brightly in the eyes of humanity.

 

From its unique properties to its rich cultural symbolism, we’ll take a closer look at the many facets of this radiant metal that fascinates us all.

All gold are equal

When it comes to gold bars of the same weight, the value is consistent across the board. It’s reassuring to know that whether you have bullion from South Africa or China, you can expect the same level of quality.

 

That’s not something you can say about diamonds – even if two stones are the same carat weight, factors such as cut and clarity can influence their value greatly.

 

What’s more, gold doesn’t require a central bank to regulate its value, which means it doesn’t fluctuate as much as money. This makes gold a great investment option when traditional currencies don’t seem as reliable. It’s easy to see why all gold are equal in the eyes of investors.

 

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Gold has no intrinsic value

It seems counterintuitive – after all, it’s not particularly useful as a building material and it certainly doesn’t have any nutritional value.

 

However, despite all that, gold has been used as a currency for thousands of years.

So, why gold is valuable?

One of the main reasons for this is that there is just enough of it available to make it practical for use as money. But perhaps more importantly, gold has no intrinsic value.

 

This means that it is immune to changes in industrial demand that might otherwise cause its value to fluctuate wildly. In other words, you might say that gold’s worth is directly tied to its ‘worthlessness’. And that, my friends, is the paradox that has kept gold such a valuable commodity for centuries.

Gold is easy to handle and store

Does gold rust? Well, the answer is no!

 

Gold is inert, which means it doesn’t react with other compounds, making it really difficult to corrode. So, if you were to stick a gold bar somewhere and come back 10 years later, you’ll still have the exact same sized bar! Plus, gold is soft and malleable, which makes it easy to handle. You can easily divide it into smaller pieces and combine them back into a larger piece as per your convenience.

 

Bonus: Gold maintains its brilliance when in contact with most people’s skin, making it an ideal choice for wearing and carrying as a portable form of wealth. Overall, gold’s durability and ease of handling and storage make it a precious metal!

Hard to counterfeit

Its density plays a big role in this – pure gold is very heavy for its size, almost twice as dense as lead! This makes it easy to check whether something is real gold or not. Plus, every other natural material out there is either less dense, super rare, or much harder to refine than gold. Hence, gold remains a highly prized commodity precisely because of its rarity and hard-to-counterfeit nature.

 

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Gold is rare, but not too rare

You’ve probably heard that gold is a rare metal and therefore valuable, but did you know it’s not quite as rare as some other precious metals? Take platinum, for example. It has similar characteristics to gold, doesn’t corrode, and is so rare that it wasn’t even identified as a separate metal until relatively recently.

 

Gold, on the other hand, is rare enough to maintain its value, but not so rare that it’s impossible to find – in fact, many cultures have discovered it over the years.

 

Gemstones share some of these characteristics but are only found in limited locations around the world. And while silver may seem like a good alternative to gold, it’s more common than you might think. In fact, you’d need over 600 kilograms of silver to purchase the average US home, while just seven kilograms of gold would do the trick.

 

So, while gold may not be the rarest metal out there, it’s still pretty darn special.

Gold has been a shining beacon of wealth and value for thousands of years

It’s fascinating to think that we, as a society, have collectively determined that this precious metal is worth so much. And yet, despite its heavy price tag, gold lacks practical application. But that’s part of its allure – it’s a symbol of power and prestige. The elite have always possessed it, showing off their wealth to the world.

 

Over time, this cultural significance of gold kept growing, making it more than just a valuable commodity, but a material of its own. It’s amazing to think about the history and meaning behind this beautiful metal.

Gold has aesthetic value

It’s a universal truth that we’re drawn to beauty – and let’s face it, gold is pretty darn beautiful.

 

And let’s not forget about other beautiful stones and metals like Lapis lazuli and emeralds that were highly prized in ancient times. Their worth was based largely on their rarity, beauty, and usefulness in making prestige items. But when it comes down to it, there’s just something special about gold that makes it stand out from the rest.

In simpler terms, for something to be considered as ‘money’, it must tick two boxes…

Firstly, it must maintain its worth over time. In other words, it shouldn’t deteriorate or lose its value. Secondly, it can’t be something that’s easily found or created – it needs to be rare.

People have long considered gold valuable because it’s easy to trade and its value doesn’t fluctuate too much.

 

It also makes sense from a scietific perspective – let’s take a look at the periodic table.

 

Now, think about iron that’s used to make things like cars and bridges. Any element that’s heavier than iron (which means it’s further down on our chart) is made in something cool – exploding stars! The further down the chart we go, the rarer these elements are.

 

Gold, which is way down at number 79 on our chart, is one of these rare elements. That’s why gold is so special and valuable!

 

If you look closely, you’ll see that gold has some buddies on the chart – silver and copper. They’re like a family because they share similar traits. We often use these three for making coins. And the further down the chart they are (the rarer they are), the more valuable they become.

 

But there’s something else that’s super cool about these metals. They don’t change or break down when they’re left outside or put in different places.

 

So while a wooden fence might rot, or food might spoil, gold stays shiny and new. That’s another reason why we value gold so much – it always keeps its worth!

 

So, with both boxes ticked, now you know why gold is valuable!

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*Disclaimer: This article is intended for informational purposes only. All details are accurate at the time of publishing. Instarem has no affiliation or relationship with products or vendors mentioned.

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