Why Has Gold Always Been Valuable?

Part of the allure of gold may be the allure itself

There exist a plethora of articles about gold as a financial investment so here we focus on the social and psychological aspects of gold.


  • Since ancient civilization, from the Egyptians to the Inca, gold has held a special place of actual and symbolic value for humanity.
  • Gold has moreover been used as money for exchange, as a store of value, and as valuable jewelry and other artifacts.
  • Gold’s value is ultimately a social construction: it is valuable because we all agree it has been and will be in the future.
  • Still, gold’s lustrous and metallic qualities, its relative scarcity, and the difficulty of extraction have only added to the perception of gold as a valuable commodity.

Why Has Gold Always Had Value?

Some people argue that gold has no intrinsic value, that it is a barbaric relic which no longer holds the monetary qualities of the past. They contend that in a modern economic environment, paper currency is the money of choice; that gold’s only worth is as a material to make jewelry.

Why Has Gold Always Been Valuable?

At the other end of the spectrum are those that assert that gold is an asset with various intrinsic qualities that make it unique and necessary for investors to hold in their portfolios. They believe that investors have as many reasons for investing in gold as they do vehicles to make those investments.

Gold’s Essential Dichotomy

Most would agree that gold has always had value for all of these reasons—a component of decorative jewelry, a sometime currency, and as an investment. But in addition to these concrete values, we would add another characteristic of gold, which, though harder to pinpoint, is as just as real: its mystery. Part of the very appeal of gold is the mystery of its appeal.

In the world of finance and investing, we often like to tiptoe around the word “mystery.” Yet, as is true with most disciplines, there is always a place for both science and art, and even mystery.

Gold can stimulate a subjective personal experience, but gold can also be objectified if it’s adopted as a system of exchange.

This duplicity is a conundrum that is unique to gold as a commodity. Gold can be something quantitative and tangible, like money, and at the same time, it can embody something ephemeral, like a feeling, even a host of feelings. So, part of the reason that gold has always had value lies in the psychology and nature of the human experience.

Gold can exist as something that is quantitative and tangible while embodying the qualitative and ephemeral.

Gold, The Feel-Good Metal

It’s a cold day in mid-December. You’re strolling along Fifth Avenue in New York—either alone, or with a familiar—to look at the holiday shop windows. It’s late afternoon and the thin winter light has begun to fade; even darker earlier because of the threat of snow or rain today. The bells of Salvation Army red-kettle ringers grow muffled and distant; the sky lowers, closing in around you, as the first flakes of winter fall.

You stop, drawn by a Tiffany window featuring a discrete few gold pieces. Exquisitely designed yellow, pink, and white gold shapes peek from an exotic display of corals and underwater fauna. Lights beat down like the sun, coaxing the metal’s incandescence. Suddenly, a brisk wind rises, making flakes to swirl faster around you. “Hmmm,” you think, “Hot chocolate? A cognac?” You duck into a nearby hotel bar—the St. Regis, perhaps, snug with its familiar fireplace.

Well, maybe you haven’t had this exact experience. But you get the idea.

Something about the warmth of gold speaks to our human need for comfort and nurture.

In Search of a Metal to Worship

Our ancestors were faced with coming up with a method of exchange that was easier to implement than a barter system. A coin is one such medium of exchange. Of all the metals in the periodic table of elements, gold is the logical choice. We can rule out elements other than metals because a gaseous or liquid currency is not very practical from the standpoint of personal portability. This leaves metals like iron, copper, lead, silver, gold, palladium, platinum, and aluminum.

Iron, Lead, Copper, and Aluminum. These metals are prone to corrode over time so they would not be a good value in terms of storage, which is required of coins; and keeping the metals from corroding is labor-intensive. Aluminum feels very light and unsubstantial—not ideal for a coin-metal that could invoke feelings of security and value.

The “Noble Metals.” Platinum or palladium are reasonable choices because they are mostly non-reactive to other elements—that is, produce little corrosion—but they are too rare to generate enough coins to circulate. To assign value to a metal, it must be somewhat rare—so that not everyone is producing coins—but available enough so that a reasonable number of coins can be created for commerce.

Gold and Silver. Gold doesn’t corrode and can be melted over a flame, making it easy to work with and stamp as a coin. Silver and gold are beautiful metals that are easy to form into jewelry, and both of these precious metals have their own devotees in fine-jewelry circles.

Gold, The Mysterious Metal

Although silver can be polished and textured in multiple ways so as to catch the light and the eye, there remains no metal quite like gold. Unlike other elements, gold naturally possesses a subtle array of unique and beautiful colors. The atoms in gold are actually heavier than in silver and other metals. This attribute makes the electrons move faster, which in turn allows for some of the light to be absorbed into the gold—a process that Einstein’s theory of relativity helped to discern. 

Perhaps gold’s physical quality of absorbing light makes its special shine come literally from within itself.

Gold, Psychology, and Society

If the modern paper-money economy were to collapse, gold may not have immediate use—as panic sets in and people fight for their basic needs—but it will eventually.

Humans are Pack Animals. We prefer the company of other humans (to varying degrees) over complete independence. It is easier to work in groups than to attempt to live off the land on our own. This human trait forces us to find ways of working together, which in turn leads us to find ways of exchanging goods and services easily and efficiently.

Gold Provides the Comfort of Sustainability. Gold is the logical choice for this exchange. If disaster strikes, such that paper money and the system that supports it no longer exists, we will revert to gold. Arguably, gold is one of the only substances on earth with all of the qualities for the job, including sustainability. 

How a Gold Brooch Can Become a Wagu Steak. A chunk of gold may have no immediate physical value to the person holding it; they cannot eat or drink it, for example. But if society agrees to turn gold into coins into a system of exchange for goods, then that coin would instantly assume a value. What was originally inedible could become a wagyu steak dinner, for example.

Because others believe that gold has value, you do too; and because they think that you value gold, others value it too.

The Bottom Line

From an elemental perspective, gold is the most logical choice for a medium of exchange for goods and services. The metal is abundant enough to create coins but rare enough so that not everyone can produce them. Gold doesn’t corrode, providing a sustainable store of value, and humans are physically and emotionally drawn to it. Societies and economies have placed value on gold, thus perpetuating its worth.

Gold is the metal we’ll fall back on when other forms of currency don’t work, which means that gold will always have value in tough as well as good times.

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