For thousands of years, gold has been a symbol of luxury and wealth, prized for its beauty and usefulness.
Cultures like ancient Egypt, the Central American Incas and Aztecs, and the Mediterranean civilizations of Rome and Greece all sought after gold and other metals in attempts at building royal wealth and power.
Unlike renewable resources like timber and solar power, gold is considered a precious and nonrenewable resource due to the millions of years of geological processes taken to create it.
Additionally, gold can be difficult to locate and does not yield high quantities from its source, often producing only 50 grams per one ton mined.
The value of gold is also apparent in its many-faceted chemical properties. Gold is:
- Nonmagnetic, malleable, and ductile
- Oxidation-resistant (will not tarnish over time, like other metals like copper or brass)
- Highly conductive of heat and electricity
- Corrosion-resistant (great for use in electronics)
- Non-dissolvable in anything but nitro-hydrochloric acid
Gold’s many practical applications match its beauty and value as one of Earth’s greatly-prized treasures. Once we have extracted all there is to be mined, it’s gone. This renders it a finite resource, high in value as determined by the economic law of supply and demand.
Different Systems of Weight
When weighing precious metals, it’s important to remember that the system is different from what most Americans think of as standardized pounds and ounces. In troy weight, there are 31.1 grams in an ounce of gold. This is equivalent to 20 pennyweights or 480 grains.
Most English-speaking people are familiar with a weighing and conversion system called avoirdupois, a French word for “weight” or “heaviness.”
The term comes from the Anglo-French phrase meaning “goods of weight.” in 1597, Shakespeare used this term in his play Henry IV, as the first historical mention of avoirdupois as a weighing measure.
In the avoirdupois system, there are 16 ounces in a pound. We most commonly use this standard in the kitchen, while cooking and baking. Within each ounce are 16 drams, and each dram 27.344 grains.
The system for weighing precious metals is different. Called the troy system, here a pound is only 12 ounces. The British Isles have been using this measure since the Middle Ages, but it wasn’t until 1828 that the U.S. Mint adopted it to regulate coinage.
Aside from precious metals, we also use the troy system to measure gemstones, arrows and arrowhead weights, gunpowder, and bullion.
The troy pound is equivalent to 0.82 avoirdupois pound. This discrepancy makes it easy for sellers of precious metals to dupe buyers who don’t know the difference into thinking they’re getting more gold than they really are.
The Value of Gold
When trading, you want to have inclusions in your portfolio that survive the pull of the market – particularly when a recession hits. Gold’s ancient value has shown it to be a worthwhile option for the successful investor, providing they know what they’re doing with it.
Nowadays, gold has modern contemporaries that give it competition in terms of liquidity, practicality, and digitalization. However, it still holds value as a unique and rare geological resource – particularly in the artistic sphere.
The U.S. dollar is fiat money – that is, currency printed by the government that has no intrinsic worth.
Central banks control fiat, making it highly susceptible to fluctuations in the national economy. This type of representative currency is variable and will almost inevitably be affected by a boom or recession, depending on what the Federal Reserve makes available for circulation.
In comparison, gold and precious metals are a commodity whose weight does not change over time. Many traders choose to invest in gold as a dependable resource for stability and wealth, as it is protective against inflation (which highly affects the dollar, for example).
As gold is one of the oldest and most reliable currencies in the world, cryptocurrency is now beginning to harness its worth.
When you back a digital monetary asset with the physical properties of gold, it stabilizes crypto and provides financial leverage regardless of how the market shifts.
Choosing Gold for Your Portfolio
Besides the physicality of actual gold bars or bullion exchanges, it’s also possible to invest in gold through mining companies as well as exchange-traded funds (ETFs).
There is some controversy in the investment world surrounding gold. Criticizers say it is an outdated metal with no place in modern life beyond the jewelry industry and opt for other monetary and digital holdings.
On the other hand, proponents of gold’s value assert that it has intrinsic and artistic worth, claiming that every investor should include it in their portfolio.
Any savvy trader looking to add precious metals to their stock should be aware of its uniqueness in the market.
With alternative measuring systems and timeless value, gold is a commodity that can reward you for many years, as long as you properly educate yourself about its measurements and substance.
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