Blog Why Is Gold Valuable?

Why Is Gold Valuable?

There is nothing like the glitter of gold to entice even the most immaterial person on this planet. That is the magic of this beautiful, alluring, precious metal.

But why is gold so important? Why is gold valuable? I think we can figure this out if we look at the history, science, and economics behind this shining hunk of metal.

We have to understand that gold is more than just colorful metal that can be buffed and shaped into whatever we want.

Gold is precious, which is why certain writers, creators, and artists feature it in their works. There is a reason the One Ring is golden, and fictitious dragons desire to hoard it.

Gold is also a chemical element used for various scientific applications, such as wiring and solutes, since it is resistant to most acids.

But why is there such a value on a seemingly uninteresting and rare metal? There are quite a few reasons!

History of Gold

Gold is one of the earliest recorded metals used by human beings. Over 40,000 years ago, natural gold was available to cave-dwelling humanoids!

That is a very long time to be obsessed with gold. The first actual artifacts made of gold can be traced back to the 4th millennium BCE in predynastic Egypt.

Even in the fertile crescent, where some of the first civilizations began, gold artifacts appear. To say that humanity has mined gold for thousands of years would not be an understatement.

But, despite its ready availability, what were the uses of gold during these ancient times? After all, coinage didn’t appear until Lydia in the seventh century BCE.

Historical Uses of Gold

Some of the more obvious uses for gold were artistic decoration or adornment. People have easily melted and shaped gold into various designs and patterns.

Using gold for building materials was almost impossible due to its pliant nature, so people used it for many decorative pieces.

Others used it for religious rights. The Great Pyramid of Giza was capped with a massive gilded triangle, shining with the sun’s reflection to guide the great god-king to the heavens.

The golden thread was used in specialized textiles such as wedding or funeral gifts and is mentioned frequently in religious texts such as The Bible.

One of the oldest maps in the world shows the plan of a gold mine in Nubia and other geological indications. Gold was used not only for decoration but ornament as well.

Crowns, necklaces, pendants, rings, belts, baubles, teeth, and even primitive mirrors were all made of shaped, shined, and sparkling gold!

The idea of the golden fleece refers to ancient uses of fleece to trap gold dust from placer – or separated deposits of minerals.

Later, gold was mined on a much larger scale by the Romans using methods like hydraulic mining. However, one of the most famous golden escapades happened during the medieval age in Cairo.

Mansa Musa, the ruler of the Mali Empire and the richest man in the world at the time, was on his way to Mecca. When he passed through Cairo in 1324, a camel train of thousands of people accompanied him.

They gave away so much gold in Egypt that it actually caused high inflation, devaluing the price in Egypt for over a decade!

Also, let’s not forget the goals of medieval and renaissance alchemists – the elusive philosopher’s stone that turns other substances into pure gold.

The famous Conquistadors of Spain came to the Americas in the 15th century for only one reason – to find their riches in the flowing golden rivers of south and central America.

The Aztecs considered gold a product of the gods, literally calling it the “god excrement.” Legends of the city of gold, or El Dorado, still exist even to this day, enticing treasure hunters the world over.

In modern times, gold is for much more than display, ornament, and religious rights. Gold was the standard that fueled the age of exploration, the industrial revolution, and even the economies of vast nations depended on the gold standard.

Clearly, gold has played a historically significant role in humans’ lives, but what about science? Exactly what is gold, and why is gold valuable now?

The Science

In as simple terms as possible, gold is a chemical element whose symbol is Au which comes from the Latin word for gold – Aurum.

Its natural form is bright, reddish-yellow, dense, soft, and considered a transition metal. It is one of the least reactive chemical elements and resists most acids.

It is hard to absorb all this information and know what it means, but I think we can be a bit more specific about gold’s atomic, physical, and other properties.

What Is Gold?

Gold is a primordial natural occurrence, and the crystal structure is called face-centered cubic. It is thermally conductive at 318 W/(m⋅K) and is only a 2.5 of the Mohs hardness scale.

In other words, this means it can conduct thermal heat, isn’t a hard substance, and its molecular structure is that of a cube.

It’s a solid with a relatively low melting point at only 1947.52 degrees Fahrenheit. Since we can so quickly melt it, gold became one of the first metals used by humanity!

Modern Technological Uses

We don’t think of technology when we think of modern gold use. In fact, only 10% of the world’s consumption of newly produced gold goes to any industry.

However, the most important use for it is the creation of corrosion-free electrical connectors! These are used in computers and other electronic devices to create circuits.

The resistance of gold to oxidation and corrosion makes it useful for electronic industries like electrical connections.

Some great examples are USB cables, audio cables, and video cables. You might also be surprised to learn that gold has medicinal use as well.

Dentistry uses gold for crowns and permanent bridges. Colloidal gold, or gold nanoparticles, are used to absorb protein molecules onto their surfaces.

Colloidal gold can also be coated with antibodies and probe for the presence of antigens in cell surfaces. This process sounds complicated, but gold is useful for a lot more than just fillings and electronic cables.

Economics – The Gold Standard

Perhaps the most famous and recognizable use for gold is economical. For thousands of years, most world economies ran on the gold standard.

Before 1970, when Fiat currency replaced the gold standard, the world based its economy on a fixed quantity of gold.

But how was all of that determined?

How Monetary Value Is Determined

Simply put, the gold exchange relied heavily on mints. Mints produce a standard gold coin, bar, or similar unit of gold with a fixed weight and purity.

Essentially, this is what the gold standard means – a literal standard for gold exchange. However, gold is mainly used to hedge against economic disasters but is not reliable.

Measured in karats, modern coins for investment or collecting are 24 karats, though the American and British gold coins still remain at 22 karats.

Why Is Gold Valuable?

So, gold is valuable for its chemical properties and as a symbol of wealth, power, and prestige. The question “why is gold valuable” cannot simply be answered with one or two sentences.

In fact, the value of gold is dependent entirely on the trade of gold and its derivatives markets. Even now, when most computers, cell phones, and electronic devices use trace amounts of gold, the price skyrockets.

These rising prices don’t occur because of the industrial, chemical, or medicinal uses of the element. The value of gold is entirely dependent on the human perception of gold.

Even after thousands of years, this shiny metallic rock still enchants us all with calls of comfort, wealth, and expectation.

Gold has long been the standard by which humans measure a lot of their own success and triumph. Even gifts such as golden jewelry and devices are alluring to modern sensibilities.

Why is gold valuable? I think we can figure this out if we look at the history, science, and economics behind this shining hunk of metal.

What we have to understand is that gold is more than just colorful metal that can be buffed and shaped into whatever we want.

After all, people have used gold for various reasons, including food! Gold can be used as a food additive or as gold leaf, which is flake or dust that you can sprinkle into or on food as decoration.

Using – or eating – gold is the ultimate sign of wealth in our modern world. Even in medieval times, eating gold on your pies and meats or as a foil was considered opulent.

We cannot take the blame for enjoying the flicker of golden shine or the deep-rooted reverence for the wealthy and powerful. However, we can understand just a little more about gold and the history of its precious uses.