Why is Gold Valuable?

• Scarcity: Limited global supply enhances gold's intrinsic value.
• Aesthetic appeal: A symbol of wealth, historically coveted for its beauty.
• Tangible store of value: A reliable asset, historically proven to retain value over time.
• Historical significance: Cultural and monetary importance.
• Unique physical properties: Non-corrosive, durable, and versatile metal.
• Global hedge: Serves as a safe haven in times of economic uncertainty.

The history of gold and its value

Gold and silver’s value may not be immediately obvious when compared to other commodities such as grains, that have nutritional value and provide energy that we need to survive, or oil which can be used in industry and for fuel. People can be forgiven for questioning the value of precious metals and it is easy to jump to the conclusion that their shiny appearance give them value purely because they can be used for jewellery. However, this is not the main reason precious metals have value.

Gold has been regarded as valuable throughout human history, dating far back to ancient civilisations. Renowned and beloved due to its rarity and aesthetic allure, the precious metal adorned monuments and symbolised wealth and power. Later, as currencies emerged, gold then became a monetary standard, and was used widely in global trade and finance. The 20th century saw many countries move to fiat currencies, yet gold still retained its shine as a store of value, and in times of economic turmoil, like the Great Depression and more recent global recessions, gold's popularity surged as a safe-haven asset.

Why gold's physical properties add to its value

Much of gold’s value derives from its ability to be exchanged. Simply put, it is a great form of money. Historically, many commodities have been used as a form of exchange, yet physical gold has remained favoured due to specific physical properties making it perfect for monetary use.

Gold's physical characteristics contribute significantly to its value. Gold is a soft metal, meaning it is easily melted into small, easy to transport and store, coin shapes. It never rots like food, it is easy to combine with other materials, and it can be made consistently, meaning that the purity or fineness is the same.

Gold’s physical benefits do not end there. It does not rust or corrode like other metals (iron, lead and copper). This resistance ensures that gold retains its condition over time, maintaining its intrinsic qualities.

However, the true brilliance of gold lies in its scarcity. Unlike other commodities like water, plastic, and corn, there isn’t an infinite supply, thus claiming that it is ‘valuable’ seems plausible and fair. Experts estimate that around 208,874 tons of gold has been mined throughout history. If every ounce of this gold were positioned next to each other, this could create a cube measuring about 22 metres on each side. The global demand for gold has never been higher.

Gold as a hedge against inflation

Because gold has been assigned intrinsic value, it is often used as a hedge against rising inflation. Other commodities such as oil, agricultural products, and industrial metals are not able to do this, and most will rise in price as inflation rises.

Unlike paper ‘money’ (fiat currency), precious metals tend to hold value, meaning that what they are worth in the beginning, will remain in the future. An ounce of gold will always be an ounce of gold in relative terms. Due to its endurance, gold is often seen as a safer bet for investment purposes during times of economic instability.

This often makes gold an attractive option for those seeking a safe-haven during unstable economic or geopolitical situations. The ability of this precious metal to maintain its value over the long term further solidifies its popularity.

Physical gold as real money

Physical gold and silver have been recognised as money for many centuries, longer than any other form of currency. Throughout history, people have turned to these precious metals as a means to preserve their wealth for their future.

Gold and silver are impervious to common elements such as fire and water, these precious metals endure through time without need for upkeep or maintenance, or succumbing to decay or corrosion. Unlike digital ‘currencies’ represented by digital 1's and 0's or paper symbols with promises of value, physical gold bullion is real, tangible wealth, just like our ancestors used.

Physical bullion transcends modern money; it is real, actual wealth that you can touch and hold, similar to how our ancestors saw and used gold and silver. The fact that these precious metals have been used as money for so long shows how they've always been seen as valuable, making them lasting symbols of keeping wealth safe for many generations.

Conclusion: why gold remains valuable today

In conclusion, gold's enduring appeal is due to its tangible and timeless qualities. Recognised as money for many centuries, its scarcity and unique physical qualities contribute to its enduring value. Often serving as a safe-haven in a world of economic uncertainty and global debt, this precious metal offers many advantages that other investments do not. Physical gold is a symbol of stability, and is used as a way to preserve wealth for the future, often passed on from one generation to the next, and that is what makes it so very valuable.