We know that gold has always been seen as valuable – but have you ever stopped to consider why? It’s easy to assume ‘it just is’, but if we look at the ways in which different civilizations have functioned, grown, and traded throughout history; the use of gold features heavily. But how did this most noble of the noble metals (which formed from supernova dust and landed on Earth via asteroids for the most part) become our most prized metal of choice? Let’s look at some of the ways that gold has been, and continues to be, seen as valuable – and consider its enduring legacy today.

Value = Prized Commodity

What is it that gives gold such a high value? That’s a hard question to answer. The term ‘value’ itself is so closely tied to money that it’s hard to extrapolate. But, if we look at its definition, as a noun ‘value’ means quality, quantity, worth, and importance. And as a verb, it relates to the idea of being held in high esteem. It’s not hard to see how gold meets all of these criteria. But are there any innate properties that make gold so valuable? Well, as a metal it’s substantial, durable, versatile, portable, and divisible. Also it doesn’t rust like iron. And it’s attractive to look at. But why does it continue to hold its value as a commodity?

Fashionable & Accessible

Most advanced early civilizations (such as the Greeks, Egyptians, Romans, Aztec, and Incas) were located near high gold yielding areas. As these societies had the means and tools needed to extract the metal, they did so – putting it to good use by transforming it into coins, idols, jewelry etc. 

In fact, the original capstones of the Great Pyramids of Giza were allegedly made from gold. Given that those of such prestige attached a high value to this metal, it’s clear to see how gold became associated with sophistication. As empires expanded, conquered tribes adopted their host’s cultures – meaning desire for gold must have become more widespread (possibly as an exercise in ‘reification’) – therefore adding to its perception as a valuable metal. But trends aside, gold is very easily shaped. It can be fused with other metals to create durable (and attractive) alloys. In addition to being decorative and desirable, gold’s value also extends to other more practical uses.

A Superb Electronics Conductor

Gold is prized in electronics because it is high performance, long-lasting, and easy to use. Several household devices like HDMI cables and the core of computer processors, contain gold because it easily conducts electrons. This is also why gold is found inside all kinds of household items; including television sets, mobile phones, and cameras, and is commonly used in circuit boards – electroplated onto all kinds of connectors and capacitors. It’s also present in all components of desktop and laptop computers because it enables the fast transferral of data.

Uses Beyond This World

But gold’s scientific uses don’t stop there. The metals conductive properties are highly sought after in relation to space travel. It’s often used as a vehicle coating on top of polyester film, since it can reflect infrared radiation and reduce the amount of heat that machinery absorbs in space.

In addition, gold is actively employed as a lubricant between mechanical parts in space equipment – again, as it can withstand radiation and heat better than other organic elements. In zero gravity, gold molecules slide past one another to create the lubricant effect; allowing parts to move freely in outer space.

Back on Earth, gold is also a key component in many medical devices and instruments – and is even used in some medicines to treat everything from arthritis to certain types of cancer. And while they may no longer be in fashion, gold teeth were used by dentists for a good 2,500 years.

Limited Supply

The ultimate indicator of value is scarcity. When something’s difficult to obtain and in short supply, its value increases. That’s why gold has the edge over silver and other metals. More silver is mined each year – 1 billion ounces vs. 120 million ounces of gold – so the market for gold is more profitable as there’s less of it in circulation. And because gold’s certainly denser,  physically less of it is worth more than its equivalent in silver. Like most natural resources, there’s a finite amount of gold. That’s not to say that we’re ‘running out’ of it, but it follows that the more we mine it, the deeper we need to dig to extract it, and the more difficult that becomes. Many of the larger mines are nearing the end of their lifecycles and fewer new ones are being discovered. Also, mining companies are spending less on gold exploration, so the reality is that, if demand continues and extraction stops, gold’s value will increase too.

Key Financial Driver

Gold has a long history of being a surefire asset in times of economic uncertainty. It even underpinned major world currencies for a good half a century – when the ‘Gold Standard’ was favored as a way of guaranteeing value. From an investment perspective, as well as being worth more, gold has always held its value long term. When stock markets crash, savvy investors with diversified portfolios lean on their gold reserves to make up for any shortfalls. 

That’s why gold sets the bar (pardon the pun) in so many ways. Simply put, there will always be a demand for it when all other forms of value – e.g. cryptocurrency, fiat currency, other precious metals – fail. As a result, an investment in gold – in whatever form it takes – will always be worthwhile. There will always be demand – and desire – for it in all parts of the world. The ‘why’ behind gold’s value is a subject of extensive debate, research, and speculation. However, it’s wise not accept its value as intrinsic and to consider its broader place in history and society – particularly if you’re thinking about investing in it. 

Ultimately, beauty always lies in the eye of the beholder. Luckily, where gold’s concerned, there are many of those.