Why is gold valued so highly?

However, the lustrous and metallic qualities of gold, its relative scarcity and the difficulty of extraction have only increased the perception of gold as a valuable asset. This has led to the rise of Gold IRA brokers who specialize in helping people invest in gold. So it turns out that the reason why gold is precious is precisely because it is so chemically uninteresting. Pure gold is too soft to be a metal, so much so that people used to bite into coins to check for gold.

Human tooth enamel has a Mohs hardness of 5, while gold has only 2.5, so teeth can make a dent in a piece of gold, but not a gold-plated coin. Ultimately, what is sought in a currency is for it to be a small but dense store of value so that you can carry a large amount of purchasing power easily, durable to be able to store it and not be wasted, distinctive (so it's easy to see that it's real), with a limited supply to a certain extent (either due to natural or political restrictions) and safe to handle. Mercantilism, the idea that a country becomes richer by exporting more than it imports and earning gold (and silver) from its partners, would be formed from this relationship. So what exactly made gold so valuable and expensive, and why did several peoples show such interest in converting it into currencies? Surprisingly, it's not so much about the properties of gold, but about those that other elements don't have. In times of crisis, whether due to a war or because of an economic slowdown, investors tend to resort to “safe” assets, such as gold, with an ounce of physical gold more attractive, while the share of an individual stock or, in fact, the broader index, plummets.

The relative inertia of gold makes it possible to create an elaborate golden jaguar and be sure that 1000 years later it can be found in the window of a museum in central London, still in perfect condition. Nowadays, although its properties have not changed and there is more gold than ever, it is simply too restrictive; economies are fast and dynamic, with massive productions and impressive technical possibilities. But as is always the case, gold has value because people say they have it because of its uses, its appearance or its association with status, wealth and power. If you put together all the earrings, all the golden rulers, the small traces of gold on each computer chip, each pre-Columbian statuette, each wedding ring and cast it, it is estimated that you would only have a 20-meter cube left or something like that.

This lack of correlation with other asset classes is a key reason why investors usually consider holding 5 to 10 percent of their portfolio in gold. Since it first caught the attention of man, its brilliance and color have given gold considerable decorative appeal and this is reflected in the fact that almost half of the gold mined has been converted into jewelry. This is due to the enormous investment market surrounding gold, since the amount of gold traded daily far exceeds the total physical supply of the metal. It is estimated that just over 200,000 tons of gold have been mined throughout history, most of which has been in the past 70 years, according to the World Gold Council.

In the 16th century, the discovery of South America and its vast gold deposits caused a huge fall in the value of gold and, therefore, an enormous increase in the price of everything else. Rupert is a market analyst for Kinesis Money and is responsible for updating the community with information and analysis on the gold and silver markets. Alloys and minerals such as bronze, brass and pyrite can pass through it, to a certain extent, but other properties can be used to check if a coin is made of gold or not.