Why is Gold so valuable?

[normal]

What?! This is easy.

It's valuable because of rarity. It makes it more stable than the value of apples or ham. And it's valuable because it doesn't deteriorate like apples and ham. These qualities made it a "currency" and it became a method of keeping count of how many potential apples and hams you have.

[Thinking Aloud]

Pork and apple burgers ...

[klr]

Alright people, remember this is the serious corner of the forum

But how can something that doesn't get used be so valuable? It's downright silly IMHO.

Just like virginity...

Interesting analogy.

What?! This is easy.

It's valuable because of rarity. It makes it more stable than the value of apples or ham. And it's valuable because it doesn't deteriorate like apples and ham. These qualities made it a "currency" and it became a method of keeping count of how many potential apples and hams you have.

Yes, but: It's rare - so what? If enough people/countries just decided they didn't want it, the value of gold would plummet.

[Clinton Huxley]

Who says the market is rational? There is demand for gold. Hence the value of gold.

[normal]

What?! This is easy.

It's valuable because of rarity. It makes it more stable than the value of apples or ham. And it's valuable because it doesn't deteriorate like apples and ham. These qualities made it a "currency" and it became a method of keeping count of how many potential apples and hams you have.

Yes, but: It's rare - so what? If enough people/countries just decided they didn't want it, the value of gold would plummet.

You tell them that. Also try saying that money is worthless since you can't eat it or make comfortable shelters out of it. I'm sure they'll give it all to you

[Adenosine]

Alright people, remember this is the serious corner of the forum

But how can something that doesn't get used be so valuable? It's downright silly IMHO.

Just like virginity...

Interesting analogy.

What?! This is easy.

It's valuable because of rarity. It makes it more stable than the value of apples or ham. And it's valuable because it doesn't deteriorate like apples and ham. These qualities made it a "currency" and it became a method of keeping count of how many potential apples and hams you have.

Yes, but: It's rare - so what? If enough people/countries just decided they didn't want it, the value of gold would plummet.

To a point but there is a lot of money tied up in gold futures so the economy would take a while to catch up.

Also, just to insert some reality, you'll never convince enough people that gold isn't desirable. It is a status symbol. Everyone wants gold, from the millionaires who want a gold Cartier watch with matching cufflinks and tiepin to the gangstas who want the grill and the bling.

Gold also has a lot of uses in electronics and a new use as nanosized particles in analytical science.

But yes, most of it is psychological.

[klr]

What?! This is easy.

It's valuable because of rarity. It makes it more stable than the value of apples or ham. And it's valuable because it doesn't deteriorate like apples and ham. These qualities made it a "currency" and it became a method of keeping count of how many potential apples and hams you have.

Yes, but: It's rare - so what? If enough people/countries just decided they didn't want it, the value of gold would plummet.

You tell them that. Also try saying that money is worthless since you can't eat it or make comfortable shelters out of it. I'm sure they'll give it all to you

That's exactly what gold hoarders do - or don't do to be more exact. "Money" on the other hand gets exchanged for goods and services as and when they are needed.

I don't want anyone's hoard of gold. That's the point. It's not a double-bluff on my part.

It's even more baffling with diamonds IMHO. Why should a naturally obtained diamond be "better" than a synthetically produced one?

Who says the market is rational? There is demand for gold. Hence the value of gold.

The market isn't always rational in the short to medium term, But in the long term, irrationality tends to gets punished. In the recent past, grossly inflated property prices in Ireland were clearly irrational, and eventually the market was forced to acknowledge that, because people began to suffer from the consequences of accumulated irrationality.

[klr]

Alright people, remember this is the serious corner of the forum

But how can something that doesn't get used be so valuable? It's downright silly IMHO.

Just like virginity...

Interesting analogy.

What?! This is easy.

It's valuable because of rarity. It makes it more stable than the value of apples or ham. And it's valuable because it doesn't deteriorate like apples and ham. These qualities made it a "currency" and it became a method of keeping count of how many potential apples and hams you have.

Yes, but: It's rare - so what? If enough people/countries just decided they didn't want it, the value of gold would plummet.

To a point but there is a lot of money tied up in gold futures so the economy would take a while to catch up.

Also, just to insert some reality, you'll never convince enough people that gold isn't desirable. It is a status symbol. Everyone wants gold, from the millionaires who want a gold Cartier watch with matching cufflinks and tiepin to the gangstas who want the grill and the bling.

Gold also has a lot of uses in electronics and a new use as nanosized particles in analytical science.

But yes, most of it is psychological.

Good post.

[Pappa]

(I wasn't pretending to have a watertight argument. But hey, we've always done it this way, so why change anything now...)

That seems to be it. Gold has always been valuable, ergo it's still valuable. But how can something that doesn't get used be so valuable? It's downright silly IMHO.

In the Chalcolithic, copper became an item in high demand because it was so rare. It had practical value for making tools, but for many applications stone tools were still better, but it had high value as a status symbol - anyone with copper objects was clearly a powerful and wealthy person. In the Neolithic and well into the Chalcolithic in Europe, polished stone axes were highly prized status objects. The main factors affecting their status was the distance from their source and the detail or quality of their workmanship, some stones and axes being traded for hundreds of miles (even thousands in some cases). Most of the high status axes were very impractical objects, made out of inferior (but colourful) stone or carved with elaborate designs... either of which would make them very unsuitable for cutting down a tree.

Gold hasn't always been valuable everywhere. In parts of the Americas where gold was so plentiful it was just found lying about all over the place, it was used for very practical things (like making household objects). Aside from that though, gold had all the qualities that made it a good proxy for money. It doesn't degrade, it's rare enough that poor people can't just find it easily and become rich people, and it has an aesthetic and tactile appeal that makes go "Ooooh, shiny!".

As for not getting used... It does get used. It gets traded for other desirable things and bestows status upon its owner. If you have so much gold that you can 'waste' it by getting a metalsmith to melt it and turn it into something pretty to give to your girlfriend... then everyone can see you're someone with wealth/power/connections.

[klr]

(I wasn't pretending to have a watertight argument. But hey, we've always done it this way, so why change anything now...)

That seems to be it. Gold has always been valuable, ergo it's still valuable. But how can something that doesn't get used be so valuable? It's downright silly IMHO.

...

As for not getting used... It does get used. It gets traded for other desirable things and bestows status upon its owner. If you have so much gold that you can 'waste' it by getting a metalsmith to melt it and turn it into something pretty to give to your girlfriend... then everyone can see you're someone with wealth/power/connections.

... but that only accounts for so much of gold usage. Why is it that most gold gets hoarded? It if were that valuable as a status symbol, why isn't there a move to realise the value of hoarded gold by selling it on to "users"?

[cowiz]

Why is Gold so valuable?

...because if you give something pretty and shiny to a chick, she will shag you. 100% certainty.

[klr]

Why is Gold so valuable?

...because if you give something pretty and shiny to a chick, she will shag you. 100% certainty.

... but in that case, why not give her a roll of tinfoil? Because it's more than just being pretty and shiny. It's about the perception of value, and the fact that this represents part of your wealth.

[cowiz]

why not give her a roll of tinfoil?

Tried that. And the certainty drops to about 1.45%

[Svartalf]

In an alternate universe, cheese holds the place gold does in this one

Which gives a new meaning to "eating one's fortune"

[Svartalf]

Gold? Always believe in your soul.

I hereby owe you a thrashing for that.

Aren't diamonds your best friends?