Why Has Gold Always Been Valuable?

Why Has Gold Always Been Valuable?

While gold no longer serves as the foundation for the world’s currencies, it retains its investment appeal as an asset class in which investors are encouraged to invest in order to diversify their portfolio, with the metal’s daily price closely monitored.

But what has led to gold’s enduring appeal over thousands of years, and why is it considered a precious metal?

Why Is Gold So Expensive?

Some argue that gold has no inherent value. They claim it’s a barbaric relic with no monetary value. They argue that in a modern economic environment, paper (or digital) currency is the preferred medium of exchange and that gold’s only value is as a material for jewelry.

On the other end of the spectrum, some argue that gold is a unique and necessary asset for investors to hold in their portfolios due to its intrinsic qualities. They believe that as many reasons exist for investors to invest in gold as there are gold investment vehicles.

Many people wonder why gold is valuable at all. And, while the internet is brimming with highly technical and complicated articles about yellow metal, very few of them discuss why it is valuable in the first place! Here’s a quick explanation.

When did it all start? Actually, a long time ago. Gold’s origins as a store of value can be traced back to an ancient system of exchange that predated today’s fiat currency, namely the barter system. For example, suppose I had an extra pair of clothes and you had a vegetable garden. You needed clothes, and I needed vegetables. We exchanged handshakes and items. It’s all good.

The following are some of the reasons for gold’s enduring value:

• Gold is considered a symbol of wealth, power, and majesty.
• Gold has held an exalted position as a highly coveted, even worshipped material throughout the ages.
• Gold has been used as jewelry and a medium of exchange for millennia.
• In the event of a currency collapse, gold plays an important economic role as a means of exchange.
• Individuals can invest in gold because it is a store of value.
• Gold is scarce and difficult to obtain.
• Gold is malleable and can be formed to fit a variety of applications, including electronics, dentistry, medical tools, and the defense, aerospace, and automotive industries.
• Gold is both strong and noncorrosive.
• Gold has both visual and magnetic appeal.

People who are familiar with metals will recognize that gold is not a rare metal, but it isn’t easy to find and extract in large quantities using pre-industrial technology. Gold’s primary characteristics of corrosion resistance and ease of workability make it highly desirable for a variety of applications, including decoration and other industrial applications.

There are two significant factors that influence the value of any given element, popularity and abundance.

Any abundant element, such as aluminum, is very cheap. Despite the fact that gold is abundant, its high popularity makes it extremely valuable. As a result, it is understood that the time spent mining various elements adds value to these elements.

Another reason gold works well in terms of value is that it does not readily oxidize and thus maintains a constant weight. Other metals, such as iron and copper, rust and oxidize. Gold is scarce in this region, has a relatively stable volume, and does not rust.