Gold has long been considered the king of metals, but why? What makes this lustrous material so alluring? Why does it remain so valuable?
From a purely practical standpoint, gold has a lot of desirable properties. For one, it’s durable—it does not tarnish or rust. In fact, it’s one of the least reactive elements on the periodic table. That’s why golden relics from ancient times stay so well preserved.
Artisans throughout history have always revered gold because it’s relatively easy to shape and bend. You can mold ornate designs in gold without breaking it—making it an ideal material for jewelry and decorative flourishes. Gold is also non-toxic, which is why it has been used in dentistry for so long.
Gold has since found new uses. NASA, for example, puts a gold coating on space-bound vehicles to reflect the sun’s radiation and keep equipment cool. Astronauts’ helmets are also coated with a thin gold layer to shield space travelers from the sun’s harmful rays.
This dense, soft, and stable metal has numerous applications that are only restricted by its high price. But gold’s glamour is more than just utility. There’s something almost mythical about it. Iron, silver, copper, and other metals all serve a purpose, but you don’t hear fairy tales about a dragon who hoards lead, or a king who can change objects into aluminum with his magic touch. So what makes gold such an enduring expression of wealth?
Scarcity certainly adds to gold’s value. There is said to be more steel poured in a single hour than gold poured since the beginning of time. That’s because the elements needed to make steel are easy to come by, but you can’t simply make more gold. The only way the global supply increases is if more is unearthed. And even if you manage to locate a deep vein of this buried treasure, it can be costly and laborious to remove.
In the modern world of mass production, where nearly anything we could ever want is only a click away, gold remains as precious as ever. According to author Simon Black, it’s a fact we can’t take for granted.
“It takes nature hundreds of millions of years to deposit minerals deep in the earth’s crust while human beings only require a few decades to pull most of it out,” Black writes. “This creates the constant need for mining companies to explore for more and more major discoveries. Problem is—that’s not happening. Mining companies aren’t finding any more vast deposits.”
Rarity often demands a high price tag. But tastes change. The things our ancestors found precious don’t always hold true today.
But gold’s prestige has remained surprisingly consistent. For thousands of years, among various cultures, gold has been associated with wealth and royalty. And it still symbolizes the highest tier today. Bronze and silver don’t take the top prize. Gold does.
To the ancient mind, gold had a connection to the sun. For the Inca civilization, gold was thought to be “tears of the sun,” and ancient Egyptians held that gold symbolized the sun. The atomic symbol for gold is Au, which comes from the Latin name aurum, meaning “glow of the dawn.”
This mellow yellow metal was so prized that it became the material used to create the first currency system thousands of years ago.
Few materials have enjoyed a sense of worth as strong or as enduring as gold. The price of this precious metal may fluctuate over the years, but it has remained a valuable commodity. Even throughout the boom and bust cycles of the 2000s, gold’s value has steadily risen.
Gold’s reputation for economic stability has been proven repeatedly. In his book “The Great Gold Comeback,” James R. Cook charts the course of gold in commerce. He notes that, both in ancient Rome and during the European Renaissance, when gold reigned as the standard for buying and selling, society flourished and political upheavals were rare. But when governments and monarchies began diluting coins with lesser metals as a means to put more cash into the system, society began to crumble.
“Centuries of chronic debasement from dishonest rulers contributed to the economic stagnation of feudalism,” Cook writes. “Gold meets the most stringent definitions of liquid wealth, and this pure form of money can only be produced through an elaborate mining process. In fact, a slow increase in gold money through mining seems vastly preferable to the printing press method of money creation, since the former has a natural brake on expansion, while the latter has no such safeguard.”
In man’s endless quest for convenience, paper money emerged about 300 years ago. But gold remained the support behind this system. Instead of carrying around a bunch of coins and bars, paper notes served as a kind of receipt from the goldsmith who held the physical metal. The U.S. government used similar gold certificates in the 19th and early 20th centuries. When someone was ready to cash in, the certificates were redeemable in actual gold.
Today, this gold standard is long gone. Instead, banks print money in endless quantities—with nothing of any substance standing behind it. A torrent of cash and credit transactions pours through our economy, but these only have as much value as the system says they do.
This is one reason why some economic experts call for a return to a gold standard, where the money in circulation is once again backed by this historically precious metal.
But you don’t have to wait around for a gold standard to buy some sense of this time-tested stability. Today, many investors still devote at least a portion of their portfolio to gold to guard against the inflationary inevitability of the modern economy—and to own something of lasting worth and substance.
Jim Cook, founder of Investment Rarities, has been an expert in gold investment for over 44 years. To get a free copy of “The Great Gold Comeback, Bankruptcy of the Welfare State,” call 1-800-328-1860 or visit investmentrarities.com/free-book. Many readers have called this the best book ever written on the coming welfare crisis.