Over the course of history, humans have found various uses for the Earth’s finite supply of gold, and its roles in society have evolved throughout time. One thing that’s remained constant is the emotional connection we have towards this precious metal.
We’ve long valued it as one of the most treasured commodities on the planet – but have you ever wondered why? From evolutionary factors to the perennial human desire to achieve a higher social status, there are a host of reasons explaining why we are so attracted to gilded goods.
In this guide, we explore the psychology behind humans’ unique relationship with gold and all of its many guises. We take a deep dive into the evolution of gold’s value to society and how it has so profoundly influenced human behaviour. From the Gold Rush to the rise and fall of the gold standard, this luxury item has shaped many different aspects of human history. By highlighting some of the most prevalent facts and stats, this guide uncovers the economic, historical and psychological value of gold.
A brief history of gold
Society’s fascination with gold is nothing new. But when exactly was the metal first discovered and used?
1.
Historians can’t pinpoint the exact period of time when gold was first discovered. However, we do know that the ancient Egyptians were one of the first civilisations to actively interact with the metal. This means that gold was likely being collected in 3,100 BCE, over 5,000 years ago.
2.
Nubia is widely considered to be the site of the world’s first gold mine and gold was harvested here for thousands of years.
3.
The Egyptians largely used gold to create jewellery and religious artefacts. One of the most famous depictions of the metal’s prominence during this period is Tutankhamun's death mask which comprises two alloys of gold and weighs around 10 kg – gold accounts for 95% of the mask’s weight.
4.
It wasn’t until the 6th century BCE that gold was first used as a form of currency. Lydia – part of modern-day Turkey – was an important trading hub, and it was here some of the world’s earliest coins were minted using gold and silver.
5.
Gold coinage was later used and developed further by the Greeks and the Romans. Gold became a symbol of wealth and was closely associated with divinity. This meant anyone in possession of the precious metal was deemed to have a higher social status.
6.
Aureus is one of the gold coins created by the ancient Romans. Its name was derived from the latin for gold, aurum, which is where its chemical symbol (Au) comes from.
Tutankhamun's death mask which comprises two alloys of gold and weighs around 10 kg – 95% is gold.
Modern currency and the gold standard
7.
Since then, gold has been commonly used in currencies around the world. And, for around a hundred years in the late-19th and 20th centuries, the gold standard was a monetary system used by some of the world’s biggest economies. The system directly linked the value of a country’s currency to an equivalent in gold.
8.
The main benefits of this system pertained to economic stabilisation. It was seen as a way of mitigating financial risks associated with fluctuations in inflation rates while also restricting governmental power to control and manipulate the national supply of money. These factors all play into the belief that gold – in an economic sense – is useful in easing consumer anxiety.
9.
On the other side of the coin, the availability of the commodity was (and is) dictated by mining and rates of extraction around the world, and this practice has inherent environmental and social impacts. In addition, the lack of flexibility around the money supply made government intervention more challenging during times of economic downturn.
10.
Former Chair of the Federal Reserve of the United States, Alan Greenspan, famously said:
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.
For around a hundred years in the late-19th and 20th centuries, the gold standard was a monetary system used by some of the world’s biggest economies.
The psychology of gold investments
The idea of gold acting as a means of economic stabilisation is still prevalent today, especially in the realm of investments.
11.
As we’ve discovered, gold has been a pillar of international trade for millenia. And, throughout history, it’s been an important asset for investors – particularly during economic slumps or in times of political uncertainty.
12.
Perhaps the best example of this came in the 20th century during the Great Depression in America. With various factors leading to oppressive rates of deflation, alarmed members of the public started to hoard more gold as a means of safeguarding their finances. This highlights the incredible power and influence of gold, not only as a physical asset, but also as a way of mitigating economic uncertainty that affected people across the globe at this time.
13.
However, in 1933, President Roosevelt passed legislation making it illegal for individuals to hoard gold bullion with a total value exceeding $100, since it was deemed that widespread private holdings were hindering recovery efforts from the Great Depression.
14.
Gold was exchanged at a price of $20.67 per ounce, and soon after the executive order, the price was raised to $35 per ounce to boost America’s money supply. People who held onto their stocks were branded criminals, representing a stark shift in prevailing societal attitudes from the metal’s strong association with divinity and higher social status in classical antiquity.
During the Great Depression in America, alarmed members of the public started to hoard more gold as a means of safeguarding their finances.
15.
Fast forward a century and today gold is still considered a safe haven investment. Beyond its inherent value as an asset, psychological factors often drive investment decisions. The perception (and reality) of gold as a safe haven asset means investors often have a strong emotional draw, seeing it as a way to ease financial uncertainty during turbulent times.
16.
According to renowned former Wall Street trader Gerald M. Loeb, our enduring demand for gold is instinctive:
The desire for gold is the most universal and deeply rooted commercial instinct of the human race.
17.
As much as gold can offer a sense of financial security, the opposite is also true. Whether it’s a fear of missing out or the influence of a herd mentality, choosing not to invest in gold can evoke feelings of anxiety, ultimately leading to investment decisions that are based more on emotion than rational thinking. We’ve seen a high-profile example of this in the recent rise and subsequent crash of cryptocurrency and Bitcoin investing, which led to billions in investor losses.
18.
Private investors aren’t the only ones with a keen eye for gold. Countries all around the globe stockpile the commodity as a means of hedging against inflation and securing economic stability – it’s often viewed as a type of national insurance policy. America has the largest gold reserves, followed by Germany.
Countries all around the globe stockpile the commodity as a means of hedging against inflation and securing economic stability.
The power of gold jewellery
Gold has been used to create elegant and desirable items of jewellery for thousands of years. Today, people hold a similar emotional connection towards these pieces as the ancient Egyptians, viewing them as a status symbol and a sign of wealth. But why is gold so prominent in the jewellery industry, and why does this psychological sway exist in the first place?
19.
There’s no shortage of applications for gold, but jewellery is the most common use for the metal. According to statistics, 47% of mined gold is used in jewellery, with private investment (21.6%) accounting for the second-largest share.
20.
Gold is an incredibly versatile and practical metal. From a comfort point of view, the metal is a great heat conductor, meaning it can quickly reach body temperature when it comes into contact with our skin.
21.
It’s also one of the least chemically reactive elements. This means it’s highly adept at retaining its lustre over a number of years, making it a suitable material for luxury jewellery.
22.
Even though it can be used to create seemingly delicate items, gold, in its purest form, is virtually indestructible. It isn’t susceptible to corrosion or rust, and this incredibly high durability is one of the reasons it’s so favoured in the creation of high-end jewellery.
23.
Naturally, the durability and physical properties of the metal depend on its caratage; this is a measurement of the gold’s purity. Pure gold is 24 carats; 18 carat gold comprises 75% pure gold; 9 carat gold contains 37.5%. In the UK, 9 is the minimum caratage required for an alloy to still be classified as gold.
47% of mined gold is used in jewellery, with private investment (21.6%) accounting for the second-largest share.
24.
The process of alloying can also modify the colour – rose and white gold are two of the most popular variations in jewellery. Rose gold will predominantly be a mix of pure gold and copper, while white gold uses silver or palladium to give it its hue. Alloying gold in this way improves its durability and strength, but does make it more susceptible to tarnishing.
25.
Beyond the scientific and practical reasons behind gold’s presence in jewellery, it’s also an incredibly emotive material. Owing to the royal and divine connections established over millennia with the metal, wearing gold embellishments has the potential to boost self-esteem, confidence and even our mood. It’s often seen as a method of self-expression, especially when the item holds a particular personal or sentimental value.
26.
In the same way that the emotional value of gold has been retained in society across thousands of years, its significance is often carried between generations. Heirlooms can evoke deep feelings of belonging and affection between loved ones when passed down through families. There’s no higher profile example of this than the presence of Welsh gold in Royal Family wedding bands, which has connected generations since the Queen Mother chose this incredibly rare variation for her wedding ring in 1923.
Wearing gold embellishments has the potential to boost self-esteem, confidence and even our mood.
Colour psychology and social perception
Colour psychology is a study that concerns the perceptions and emotional impacts of different colours. It’s often explored by artists looking to convey the right mood in their work, or businesses in their marketing and branding efforts to help them make an impactful first impression on customers.
27.
Studies have shown that bright colours – like gold – could have tangible mood-boosting effects by raising our dopamine levels, while also helping us to feel more energised. Besides its symbolic value, this could go a long way in explaining the colour’s popularity when trying to evoke positive emotions.
28.
The question then abounds: is our emotional connection with the metal or the colour of the metal? Professor Peter Oakley from the Royal College of Arts in London believes the two are intrinsically linked:
The two feed off each other. The idea of gold as a colour is intimately connected with our idea of gold as a material. So, when we think of it as a colour, we unconsciously relate to the precious metal – which in turn conjures images of wealth and success.
29.
Gold is the only naturally yellow metal – its uniqueness and rarity is one of the reasons why we attach so much aesthetic value to it. Other metals can develop a similar hue, but only after they’ve been oxidised or reacted with other elements.
30.
The term ‘gold mine’ naturally refers to a site where metal is extracted. But more colloquially, it’s used to describe a vast opportunity, and is defined by the Cambridge Dictionary as “something from which a large amount of something valuable, such as money or information, can be obtained”. In the human psyche, if something is referred to as a ‘gold mine’, we’re likely to attach mostly positive connotations to it. This isn’t the only example of the metal’s presence in popular parlance. Phrases like ‘good as gold’, ‘golden days’ and ‘heart of gold’ all have positive implications.
Gold is the only naturally yellow metal – its uniqueness and rarity is one of the reasons why we attach so much aesthetic value to it.
31.
Thousands of years ago, gold was reserved for only the most elite members of society. Today, while the metal is far more widely accessible, we see a continuation of these ancient attitudes through the award of gold medals and trophies at prestigious events to celebrate remarkable achievements. For example, the famous Olympic gold medals – first introduced at the 1904 St. Louis games – signify elite sporting accomplishments. Until 1912, these awards were made of solid gold. Today, official standards dictate that Olympic gold medals must contain at least 6 grams of gold plating – silver comprises more than 92% of the composition.
32.
It’s something of a tradition for athletes to seemingly bite into their gold medals – this iconic custom has spread across the sporting world. Biting the metal used to be a way to test its authenticity, since bite marks would be imprinted if the gold was pure. With gold comprising less than 2% of modern Olympic medals, the act is now more for the photographers’ benefit. The lack of pure gold in the medals also plays into the idea that perhaps we have a deeper emotional connection with the colour than we do the material.
33.
For thousands of years, gold has been closely associated with royalty, and the UK monarchy has a rich history of incorporating the metal into various items of great significance.
34.
Royal occasions and celebrations have long been gilded affairs. For example, the Coronation Regalia, the Gold State Coach and the Crown Jewels all contain lashings of gold, signifying the family’s vast power, status and wealth. In the minds of the viewing audience, these constant references to gold reinforce the idea that it’s a highly symbolic commodity that represents prestige and authority.
Biting the metal used to be a way to test its authenticity, since bite marks would be imprinted if the gold was pure.
Gold in everyday life
Unlike in ancient Egyptian times, gold is no longer reserved only for the most powerful members of society. While the metal is still used in a range of different fields to represent significant success or achievement, this versatile metal also has some slightly more discreet applications that are key to lots of aspects of modern life. Perhaps without realising it, we interact with the metal in one way or another just about every day. Here are three of the most prevalent uses:
35.
Smartphones and digital devices
The most common industrial use of gold is in the electronics industry. Due to its superior conductivity, non-reactivity and range of other favourable physical properties, gold is commonly used in the composition of electrical components of smartphones. Even though the total amount is extremely small - about 0.034g of gold is used in a typical iPhone – the metal’s significance becomes clear when you consider the billions of devices in circulation.
36.
Dentistry
Another industry with high demand for the commodity is dentistry. Gold has been used in dental care for millenia. In ancient times, having gold as part of one’s dental makeup was seen as a sign of wealth. However, there are many more practical reasons behind its use in the industry: gold is malleable, strong, stain-resistant and comfortable. While gold teeth are still a popular display of wealth in certain sections of society, a growing number of people are favouring more discreet options like white dental implants, perhaps suggesting a shift in attitudes.
0.034g of gold is used in a typical iPhone – the metal’s significance becomes clear when you consider the billions of devices in circulation.
37.
Healthcare
In healthcare more broadly, gold is used in a range of diagnostic tools and targeted therapies. Stents, scopes and pacemakers are just some of the items that are likely to contain gold. In modern medicine, gold nanoparticles are being used to more accurately deliver drugs to the appropriate areas of the body and to even fight cancer cells.
38.
Reasons for demand
There are a number of reasons why demand for gold is so high in the medical sector:
It’s one of the densest metals on Earth, which means it can be clearly detected by X-ray machines.
It’s biocompatible – there is a low risk of infection or adverse reactions when used in the human body.
Its malleability makes manufacturing highly complex medical products easier.
Gold nanoparticles are being used to more accurately deliver drugs to the appropriate areas of the body and to even fight cancer cells.
The prevalence of gold mining and public attitudes
39.
Mining operations are set up across the globe, but production is most heavily concentrated in a handful of locations. The most prolific gold-producing countries today are:
China
Canada
Russia
United States
Australia
40.
In 2023, China was responsible for around 10% of the world’s total gold production. For many years, this part of the world has had a strong cultural affinity with gold, which is often used to depict good luck and prosperity. Today, it’s clear that the majority of the population are in favour of the country’s widespread mining activities, which are seen as central to its economic growth.
41.
It’s estimated that more than 187,000 tonnes of gold has been mined across the course of human history: more than 90% of this total has been extracted since the California Gold Rush in the 1800s.
42.
As society’s ethical consciousness continues to grow, attitudes towards the gold mining industry are shifting, and the sector is coming under increasing scrutiny.
In 2023, China was responsible for around 10% of the world’s total gold production. For many years, this part of the world has had a strong cultural affinity with gold.
43.
The dangers of gold mining were brought into sharp focus during the California Gold Rush of the 19th century, when 120,000 Native Americans died. The most common causes of death were disease, starvation and mining-related incidences, but homicide was also rife during this period, with the influx of foreign miners heightening tensions.
44.
While working conditions have certainly come a long way since then, there is still a lot of work to be done, especially in some developing countries where, for many, the benefits of mining are outweighed by the risk of fatal consequences. At the start of 2024, more than 70 people died at an artisanal gold mine in Mali due to a shaft collapsing. Unfortunately, these types of accidents aren’t uncommon, especially in this part of the world, where often unregulated mining practices are employed.
45.
It isn’t just the threat to human life that is cause for concern. Artisanal mining accounts for around 20% of gold production, and this method is the sole largest contributor of mercury contamination in our environment. In addition, on average, 265,000 litres of water is required to produce just one kilogram of gold.
46.
There is a growing belief among certain sections of society that there is already more than enough gold in circulation to mean targeted gold mining is no longer essential. A recent study found that creating pure gold through recycling methods is 300 times less carbon intensive than underground or open pit mining processes. Considering both the human and environmental risks associated with the practice, the mining industry is facing growing opposition – especially from communities local to proposed sites.
At the start of 2024, more than 70 people died at an artisanal gold mine in Mali due to a shaft collapsing.
A look into the human psyche
Put simply, humans are drawn to shiny things. Golds, diamonds and glistening silvers are often what catches our eye first in shop windows. Perhaps this is purely due to their aesthetic value – but research is now telling us that we may need to look further back into human history for an explanation of our penchant for all that glitters.
One theory suggests that it has evolutionary roots and is linked to the need to find water to survive. The sparkly and reflective nature of water sources appeals to humans’ inherent need for survival, thus offering an explanation as to why we’re drawn to this aesthetic.
Modern research has explored this idea further, with one experiment asking blindfolded subjects to suggest what image might be on two different pieces of paper – one glossy and one matte. A common answer among those who received the glossy paper was a body of water. Vanessa M. Patrick of the University of Houston was one of the scholars involved in the research, and concluded:
...our work has shown that preference for shiny objects may have deep roots in every human. Despite the progress we have made as a species, we are still attracted to things that serve our innate needs such as water.
Similar schools of thought link it to the appearance of prehistoric tools carved from polished stones, with these items again being key to survival.
Whilst the economic and emotional benefits of gold-coloured jewellery have been acknowledged for many years, its more recent revolutionary use in electrical devices and medical treatments represent more modern values of this precious commodity. And, as technology and economic systems across the globe continue to evolve, gold is unlikely to lose its lustre as our perennial fascination with the rare metal shows no signs of ceasing.
As technology and economic systems across the globe continue to evolve, gold is unlikely to lose its lustre.
Chapter 8
Secondary reading
https://www.britannica.com/money/coin/Origins-of-coins The psychological impact of precious metals – MFEA
https://www.mfea.com/a-golden-touch-the-psychological-impact-of-precious-metals/ Gold’s contribution to society – World Gold Council
https://www.gold.org/esg/golds-contribution-to-society What is the gold standard? History and collapse – Investopedia
https://www.investopedia.com/ask/answers/09/gold-standard.asp Gold production over the past and next 25 years – LBMA
https://www.lbma.org.uk/alchemist/issue-100/gold-production-over-the-past-and-next-25-years