There are a multitude of articles on gold as a financial investment. Here we focus on the social and psychological aspects of gold that sustain its value.
- Since ancient civilizations, from the Egyptians to the Incas, gold has had real and symbolic value for humanity.
- Gold has been used as currency, a store of value, valuable jewelry, and other artifacts.
- The value of gold is ultimately a social construct; we all agree that this has always been valuable and will be valuable in the future.
- Gold’s shiny, metallic qualities, its relative rarity, and the difficulty of its extraction reinforce the perception that gold is a precious commodity.
- Platinum is also a precious metal, but cannot be turned into currency due to its rarity.
Why is gold valuable?
Some claim that gold does not intrinsic value. It is said to be a barbaric relic with no monetary value. They argue that in a modern economic environment, paper (or digital) currency is the silver of choice, and the only value of gold is as a material for making jewelry.
At the other end of the spectrum are those who claim that gold is a active with various intrinsic qualities that make it unique and necessary for investors to hold in their wallets. They believe that investors have as much reasons to invest in gold because there are gold investment vehicles.
The reasons for the enduring value of gold include:
- Gold is seen as a symbol of wealth, power and majesty.
- Gold has held a privileged place throughout the ages as a highly coveted, even revered, material.
- Gold has been used for millennia as jewelry and as a medium of exchange.
- Gold plays an important economic role as a medium of exchange in the event of a currency collapse.
- Gold is a store of value and therefore an investment opportunity for individuals.
- Gold is rare and difficult to mine.
- Gold is malleable and can be formed as needed for use in, among others, electronics, dentistry, medical tools, as well as the defense, aerospace and manufacturing industries. the automobile.
- Gold is durable and non-corrosive.
- Gold has visual beauty and magnetic appeal.
The essential dichotomy of gold
Most would agree that gold has always had value as a component of decorative jewelry, a currency sometimes, and as an investment. But to these concrete values, we would add another characteristic of gold, although more difficult to define, but just as real. Part of the appeal of gold is the mystery of that appeal.
Gold can stimulate a subjective personal experience, but it can also be objectified if adopted as a exchange system.
Gold, the metal of well-being
These metals tend to corrode over time, so they would not have good storage value, which is necessary for coins. Additionally, preventing metals from corroding is a labor-intensive task. Aluminum feels very light and unsubstantial, which is not ideal for a coin that should evoke feelings of security and value.
Platinum or palladium, among the substances known as noble metals, are a reasonable choice because they are mostly non-reactive to other elements, that is, they produce little corrosion. But they are too rare to generate a sufficient number of coins to circulate. To assign a value to a metal, it must be rare enough (so that not everyone can produce coins with it) but abundant enough that a reasonable number of coins can be created for it. Trade.
Gold and silver
Gold does not corrode. It can be melted over a flame, making it easy to work with and stamp like a coin. Silver and gold are beautiful metals that are easy to make into jewelry, and these two precious metals have their own followers in fine jewelry circles.
Gold, the mysterious metal
Although silver can be polished and textured in many ways to catch the light and the eye, there is no metal quite like gold. Unlike other elements, gold naturally has a subtle range of unique and beautiful colors.
The atoms in gold are actually heavier than those in silver and other metals. This attribute makes electrons move faster, allowing a certain amount of light to be absorbed by the gold, a process that Einstein’s theory of relativity helped discern.
Gold, psychology and society
To varying degrees, we prefer the company of other humans to complete independence. It is easier to work in a group than to try to live off the land alone. This human trait requires us to find ways to work together, which leads us to find ways to exchange goods and services easily and efficiently.
Gold offers the comfort of durability
Gold is the logical choice for this exchange. If a catastrophe occurs, such that paper money and the system that supports it no longer exist, we will likely revert to gold. Gold is arguably one of the only substances on Earth with all the qualities required for this job, including sustainability.
How a Gold Brooch Can Become a Wagyu Steak
A piece of gold may have no immediate physical value to the person holding it. They can’t eat or drink it, for example. But if society accepts that gold can be exchanged for coins and paper money, then a gold brooch instantly gains value. What’s not edible could be swapped for a Wagyu steak dinner, for example.
Because others believe gold is valuable, so do you. If everyone values gold, then it must be valuable, right?
What are the benefits of owning gold?
Beyond its natural shine and mysterious charm, there are many financial reasons to own gold. On the one hand, gold serves as a store of value, meaning its value remains stable rather than decreasing over time. Along the same lines, gold is useful as hedge against inflation. Although inflation causes the value of currencies to fall, gold is not subject to this downward pressure. Gold’s stability as a financial asset also makes the metal valuable attractive to own during periods of economic crisis.
What characteristics make gold valuable?
The value of gold is based on the shared belief that the precious metal is in fact valuable. However, certain qualities of gold make it an ideal option to serve as a medium of exchange. Unlike many other metals, gold does not corrode or deteriorate in quality. Additionally, gold is rare enough that not everyone can make a gold coin, but there is enough supply to ensure a healthy circulation of coins.
How can I invest in gold?
Various investment options available for investors looking to add gold to their portfolio. Those who are attracted to gold by its physical appeal may want to purchase gold. ingots, coins, or jewelry. However, physical possession of the metal can incur significant storage and insurance costs. Other popular investment vehicles include gold exchange-traded funds (ETFs) and gold stocks mining businesses.
Do countries hold gold reserves?
Yes, and sovereign holdings of gold go a long way to underscoring the universal belief in its enduring value. In 2022, the United States possessed over 8,000 tons of gold.
What was the gold standard?
THE gold standard was an economic system that linked a fixed value of a country’s currency to a fixed quantity of gold.
From a basic perspective, gold is the most logical choice as a medium of exchange for goods and services. The metal is abundant enough to create coins but rare enough that not everyone can produce them. Gold does not corrode, it is a lasting store of value, and humans are physically and emotionally drawn to it. Societies and economies have placed value on gold, thereby perpetuating its value.
Gold is the metal we will likely turn to when other forms of money don’t work. This means that gold will always have value in bad economic times as well as good ones.