Why is gold valuable?

One of the first words that come to mind when picturing gold is valuable. This yellow, shiny metal has been a part of human history for millennia and continues to be valuable to us today. Why is that?

Gold is unique from other metals in how nonreactive it is. Its chemical structure keeps it from easily bonding with other elements. Therefore, it never rusts or tarnishes. A gold statue from ancient Egyptians will still look gold today. These properties also keep it from corroding over time.

The less you have of something will typically make the item worth more. This rule holds true for gold. If people collected every piece of gold ever mined or waiting to be mined in the earth, we would have a cube measuring around 19 cubic metres.

Another highly, valued property of gold is its ductility and malleability. This means that people can spread or stretch gold without breaking. This quality makes gold ideal for formation into other shapes such as jewelry or electrical components.

Most people know or have heard of the term “gold standard.” Decades ago, the term referred to the link between paper money to gold. Gold backed up the value of money with physical properties. Rather than trade in $100 worth of gold, you could give someone a $100 bill that was actually symbolic of an amount of gold. While the gold market has fluctuated, it has always retained recognizable value. In 1973, President Nixon took the US off the gold standard because the country was running out of gold necessary to back up the amount of money printed.

From a elemental perspective, gold is the most logical choice for a medium of exchange for goods and services. It is abundant enough to create coins, but rare enough that not everyone can make them. It doesn’t corrode, providing a sustainable store of value, and humans are physically attracted to its color and feel.

Societies, and now economies, have placed value on gold, thus perpetuating its worth. It is the metal we fall back on when other forms of currency don’t work, which means it always has some value as insurance against tough times.

Check out my related post: How to start a Swiss Bank Account?

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