Gold is expensive the same reason silver is more expensive than copper; different metals have different properties, characteristics, and uses by humans.
Yeah, you can even eat the stuff!
Think about it, approximately 78% of all gold is processed into various forms of jewelry, which is by no means a cheap good. On the contrary, copper is used in building construction, power generation and transmission, and electronic product manufacturing, which causes the metal to be less expensive just simply due to supply and demand factors.
Gold is expensive because it is a luxury good. We don’t use it in our everyday lives other than perhaps exchanging it for currency at a bank, and thus, it holds greater value to us as opposed to something like copper, which is a highly common metal.
When we observe the price of a metal, we must look at its function, its abundance, and its chemical properties.
Chemical Properties of Gold
In the days of early man, barter was the most common means of trade. But as huts evolved into houses and villages grew into towns, the need for a standardized form of money also grew.
Almost anything can be used as money, though obviously some things work better than others. It’s hard to transact an exchange of value with things people don’t want, and other things don’t store value well. Over thousands of years, gold emerged as the best form of money.
It’s a bit puzzling why gold’s chemical properties are seen as superior to other metals. After all, when compared to gold:
- Silver has far more industrial uses
- Copper is much more plentiful and has superior electrical conductivity
- Platinum and palladium are both more rare and the best-known metals to reduce harmful auto emissions
So? Here’s why mankind chose it over other assets…
Gold cannot be destroyed by…
- Water (it doesn’t rust or tarnish)
- Time (coins remain recognizable after a thousand years)
- Fire (minimum 1945.4° F to melt)
Gold doesn’t need…
- Feeding (like cattle)
- Fertilizer (like corn)
- Maintenance (like printing presses)
As a metal, gold is uniquely…
- Malleable (it spreads without cracking)
- Ductile (it stretches without breaking)
- Beautiful (ask any bride)
- Rare (all the gold ever found would only fill two Olympic-sized swimming pools)
There’s no superstition here. It’s just common sense. Gold has the ideal chemical properties to serve as money and a good store of value—just as aluminum is good for making aircraft, steel is good for building structures, uranium is good as nuclear fuel, and paper is good for making books.
We don’t print books on aluminum or build skyscrapers out of paper. Every element has its ideal use.
Which is why…
Gold will Retain it’s Value
Gold will retain its value into the future for the simple reason that it always has. No exceptions and no fine print.
People have valued gold for over 3,000 years. Regardless of what today’s gold critics claim, gold will always have value. It is the ultimate form of money. No matter what the social, political, or financial climate has been in the world, gold has never gone to zero or defrauded an investor.
How many stocks have survived for thousands of years? Gold is an excellent wealth and portfolio diversifier for the reasons we list above. The coins you buy today will outlast you!
We know gold is valuable because mankind has chosen it, history has proven it, and its zero counterparty risk confirms it.
Latest posts by David McDonald (see all)
- Does Foreign Aid To Africa Do More Harm Than Good? - April 22, 2017
- Here’s Why China Is Not As Rich As America - April 21, 2017
- The Not-So-Surprising Truth About Which Skills Pay ‘The Most’ Per Hour - April 17, 2017