Many say that Gold has no intrinsic value, and that it is a vicious artic fact that no does not hold the economic characteristics of the past. They argue that in a contemporary economic world, paper cash is the money of choice. Thus, Gold’s is only best for a jewelry and other artifacts.
While others say that gold is a property with numerous intrinsic characteristics that make it distinctive and essential for traders and investors to hold in their portfolios. They think that traders and investors have numerous advantages for having Gold or investing in it, just like investing in a car or a house.
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Many would concur that Gold has at all times had value for all of these purposes—an element of decorative jewelry, an investment, and as a sometime currency. However, we will shed light to these concrete values as will add another characteristic of Gold which is its real mystery.
Gold: What Makes It So Special?
In the realm of investing and finance, we often like to sneak around the word “mystery.” Yet, as is true with most disciplines, there is always a place for both science and art, and even mystery.
This duplicity is a challenge that is exceptional to Gold as a commodity. Gold can be something quantitative and tangible, like money, and yet at the same time, it can symbolize something transitory, like a feeling, even a host of feelings. Therefore, part of the reason that Gold has always had value lies in the psychology and nature of the human experience.
Let’s Deep Dive into its Science, Psychology, And Value
The attitude of human beings towards Gold is strange. Chemically, it is not interesting: it hardly reacts with other elements. Nevertheless, of all the elements on the periodic table, Gold is the one we have tended to choose as a bargaining chip. Why?
Some elements are easy to discard. Besides, they have no color. So, how is one to know what it is?
There are many other elements on the periodic table that can be discarded for several reasons. For instance, mercury and bromine are liquid elements at room temperature and pressure; thus, making them impractical. In addition, they are both poisonous. For the same reason, we can rule out arsenic and several others.
We can exclude many elements as they are too reactive and evidently explosive money is not very convenient.
A similar argument applies to another whole class of elements, the radioactive ones: you don’t want money that gives you cancer.
And then there is the group called “rare earths,” most of which are less rare than Gold.
Unfortunately, they are difficult to distinguish chemically, so you’d never know what’s in your pocket.
Similarly, there are several other reasons why other elements that can be discarded due them being to them being too unstable, flimsy, or rusty.
So, what are we left with?
Of the 118 elements we are left with just eight contenders: platinum, palladium, rhodium, iridium, osmium, and ruthenium, along with the now-familiar Gold and silver.
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They are known as noble metals, “noble” because they react very little chemically with other chemical compounds.
With all the noble metals, except Gold and silver, the problem is the opposite. They are so scarce that tiny coins would have to be minted, which would be easily lost. They are also difficult to extract.
That leaves only two elements: Gold and silver.
Both are scarce but not impossibly rare. Both have a relatively low melting point and are therefore easy to turn into coins, ingots, or jewelry.
But silver darkens and it reacts with tiny amounts of sulfur in the air.
That is why we particularly value Gold.
As we saw, it also has to be stable, portable, and non-toxic. And it must be quite rare. Many would be surprised how little Gold there is in the world.
If you were to gather every earring, Gold coin, tiny granules on every computer chip in the world, every pre-Columbian statue, every wedding ring and melt them down, it is estimated that what would be left is a cube of 20 meters or so.
A coin only has value because we, as a society, decide that it does. But scarcity and stability are not everything. Gold has another quality that makes it stand out among all the contenders on the periodic table: it is Golden.
All other metals are silvery except copper and, as we have already seen, copper corrodes, turning green when exposed to moisture in the air.
That makes Gold distinctive. That’s the other secret to Gold’s success as a currency. Gold is incredibly beautiful.
So, Why Is Gold Popular Amongst Traders?
Gold has traditionally been meant to be a ‘Safe Haven’ or ‘Store of Value’ asset which is a safe place for traders to keep their money during times of uncertainty or volatility.
It has been revered for thousands of years as a valuable metal, and has previously been used for beauty industry, and most notably, trade. This is valid through these days where it functions trade together with private traders, up to the world’s central banks.
Gold is still an internationally recognizable commodity since its history and continues to hold its popular demand as a commodity amongst traders until today.
Its scarcity and beauty have made humans and societies emotionally drawn to it, thus perpetuating its worth.