February 21


Why Do We Value Gold

By Steven Hernandez

February 21, 2022


Gold is valuable when compared with other precious metals?

Young King Midas sought the secret of turning everything to gold. And though he was given that power, he soon wished he wasn't.

Why do we value gold so much?

The first thing to notice is that it's not just any old metal that humans prize so highly. We don't hunt for trinkets in riverbeds or stamp gold coins out of iron ore, like they do on "Game of Thrones."

It has to be pure elemental chlorine—not some alloy or compound—to qualify as true gold. Other metals are rare; but only gold, among all elements, can be found native (i.e., uncombined) in relatively significant quantities.

This is where it gets interesting. For most of human history, gold has been the most abundant of all metals used by humans for ordinary purposes—not to mention that it's one of the least likely elements to corrode or rust.

It's quite common in large nuggets on land and even more so in riverbeds and ocean water. It requires an incredible amount of energy (a supernova) to make even a small amount, which makes sense since atomic nuclei have similar repulsive forces that push them apart. Although not as dense as some other metals, gold is unusually heavy for its size due to its high atomic number (79) and tightly-packed nucleus. Or perhaps Earth just has far more than its fair share.

But here's the interesting part: Gold is not particularly useful. The only thing we can make with it (besides other gold items and jewelry) is electronics, and even those are usually coated in a much less expensive alloy to reduce costs.

We can't make cars or bridges out of it 

we might as well use iron instead. It doesn't help that it's chemically inert, which makes it require special treatments to avoid corrosion. However, that same chemical resistance also explains why gold objects last so long after being buried—and how they attract archeologists like magnets attract metal shavings.

So if gold isn't very practical for our current technology, what was its value back in ancient times? For all we know, humans may have associated gold with something practical even before they developed metalworking skills. Perhaps it symbolized power—like electricity today—that was only available to the gods. But once primitive civilizations learned to fashion gold into ornaments, that value became "reified"—i.e., turned into an abstract but universal truth that everyone believed in and relied upon for their survival.

Why? Because it's what humans do when left to their own devices without governments or police forces: They compete for resources and fight each other tooth and claw over who gets more than their fair share. This is why pre-industrial tribes still want guns, radios, cars, medicine, etc.; because those items give them a tactical advantage over less-equipped opponents (who are forced to depend on bows, spears, horses, and horses).

This is as true for prehistoric tribes as it is for the latest economic boom or bust: Compared to other valuable items that humans might choose, gold has a lot of valuable properties. It's fairly scarce but not extremely rare; it doesn't corrode over time; you can easily melt and reshape it with no loss in quality; and (if processed properly) its supply is relatively stable.

There's nothing natural about those qualities—they're just what we value most about metals in general and gold in particular. Gold satisfies our deep-seated human need to believe we live in an orderly world where everything has predictable rules that must be if we want good things like safety, wealth, and a future for our descendants.

Humans have long preferred items that symbolize safety in chaotic times: Think about the value of diamonds, which were considered worthless just a few hundred years ago when artificial lighting made darkness less dangerous. Diamonds represented safety by being portable light sources that could be tucked into one's pocket (much like how we prefer small electronic devices today to bulky ones).

But even without electric lights or guns, gold is still more valuable than other precious metals—which is another clue as to why we see it not only on Iron Throne coins but also in many forms of modern currency . It's simply the metal with the best monetary properties (i.e., "good money") and thus wins out over all competing alternatives.


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