I never understood why people value gold and diamonds so much. I can understand the need for a certain amount of gold and diamonds for use in industry to make electronics. But why is a chunk of metal or a bunch of carbon atoms worth so much to us??? Yes they are both rare, but they serve no practical use aside from looking pretty. I’m pretty sure the overwhelming majority of gold and diamonds are mined for jewelry and not industrial applications. So why does something so useless cost so much?? Instead of spending thousands on a diamond ring, why not give your wife/girlfriend a trip around the world, or something useful for the house, a car, etc. I understand the need for luxury items, but most of those items have a use aside from looking pretty. Any thoughts on this??? Not to mention the horrific conditions that the gold and diamonds are mined in, all to satisfy people’s desire for something pretty that serves no other purpose other than to show people how rich you are. At least expensive vehicles are engineering marvels, they get you places, and are at least somewhat useful.
WHy don’t you eat a diet of beans, corn, and processed greens? Because yit tastes good. Because you like it. Same thing.
Rare (so to speak), tremendously malleable, almost infinitely workable.
The ancients could pull it out of the ground in chunks or in specks and work with it without half the work of any other metal. It was also very very pretty.
Unlike Diamonds, Gold isn’t mined in shithole areas for because it’s value is artificial. We mine it in quite a few other places very easily, thank you. It is only an environment destroyer in other places - which are already hell holes - because of it’s value.
I have thought about from time to time. I wonder if perhaps it has to do with the fact that gold and precious stones did not corrode, rust or rot. So the ancients ascribed value to them. Then each succeeding generation adopted the values of the proceeding generations. Much useful information, and some useless crap, seems to be mindlessly passed from generation to generation.
As far as I know, gold is really pretty rare. It’s also always retrievable when in a solution or whatever. Diamons really are a lot less durable than gold, and its source material is many orders of magnitude more common than gold (which is its own source material under normal - that is; not insanely expensive - conditions). “Logically”, diamonds should be worth a lot less (or more?!) than gold.
As for why we value gold as highly as we do; my only guess (and it is only a guess) is because we think it’s pretty and we can’t create or destroy it. Which I admit doesn’t explain anything.
Well, to begin with, it looks pretty. It has a distinctive shiny luster to it. It’s also durable–it doesn’t rust or dry up and blow away. Chemically, gold is pretty inert, which means that you may well find it lying around naturally in more or less pure lumps, available to people with very low levels of technology. (By contrast aluminum, far more common in Earth’s crust, wasn’t discovered until the 19th century, because it reacts very easily with other elements, and so is very hard to separate out from its many compounds.) It’s rare, but not too rare. In ancient times, you could find lumps of the stuff in streambeds, but it wasn’t like every stream was paved with gold nuggets. So, not everyone who wanted the shiny yellow rocks could just go out and pick up their own shiny yellow rocks off of the ground.
So, gold was a trade good, one of many–people would barter for gold just like they would for turquoise or rubies or glass beads or brightly colored cloth. Like those things (and unlike, say, barley or sheep or hard metals suitable for making tools and weapons), it was kind of useless, but that in itself made it a potential status symbol–“Look at me, I’m so rich and powerful I can afford to give away perfectly good food in exchange for useless shiny things that do nothing but look pretty to adorn my many women!”
Among luxury trade goods, gold had several useful properties. It is, as mentioned, durable. You can literally bury it in the ground for a few centuries and it will still be good as new. When “used” it isn’t normally consumed (not normally, anyhow). Grain or olives or livestock are eaten and that’s the end of them; even building materials (like marble or alabaster) are pretty much locked away once you use them to make your new temple or palace and can be gotten at and re-used only with considerable difficulty. A gold ring or a pair of gold earrings, on the other hand, can be easily melted down and re-formed. Unlike gemstones (like rubies), gold can be subdivided and recombined with no real loss of the material: If you cut a one carat ruby in half, you can’t go back and stick the two half-carat rubies back together again; not to mention that for really sophisticated uses of gemstones (faceting and so on), you’ll probably wind up with two one-third carat stones (say) from a one-carat raw, uncut stone, wasting a substantial amount of the material. By contrast, you can melt down a ten-ounce ingot of gold and make ten one-ounce ingots; then melt them back together into a single big ingot if that’s what’s needed.
Finally, gold is distinctive–in addition to its particular color and shine, it’s notably heavier than anything else ancient people would have encountered. These things make gold pretty much impossible to fake short of nuclear transmutations.
All of these things meant that gold was well suited to being a key trade good in a barter economy, and a store of value–instead of someone with excess goats who needs iron tools looking for someone with excess iron tools who has a hankering for a goat barbecue, our goat-herder could exchange his goats for gold to anyone who wanted goats, then turn around and exchange the gold for iron tools, or anything else he needed (and the iron-workers would take his gold because they in turn could be sure of being able to trade it for whatever they needed to whoever they needed it from). About 2,500 years ago, probably in Asia Minor, people hit on the idea of having kings stamp little pieces of gold with some kind of fancy design to say “I, King So-and-so, certify that this piece of gold indeed weighs in at one shekel”. This marked the invention of coins, and of money.
So, for a variety of reasons mostly inherent in the chemical properties of the element itself, people found it convenient to use gold as money. Which means that in large areas of the world, people have thought of gold as money for thousands of years. This has become deeply ingrained in our ways of thinking; and even though we’ve developed new (arguably better) forms of money (coins made of cheap metals, fancy pieces of paper or polymer, electronic records inside computer memories), gold is still deeply embedded in our collective imagination as “money”. And so people value it, not always entirely rationally.
Gold is a commodity. Its price is subject to market conditions. Today, among those conditions are the limited supply, high cost of production, demand, and especially the uncertain value of other investments. Gold is seen as something that will retain its value in the best and worst of circumstances. It doesn’t corrode, or evaporate, and its demand is based on many uses. But contrary to popular belief, the price of gold occasionally goes down, and it often doesn’t increase in value faster than many other investments.
Diamonds are trickier because the market has traditionally been rigged. The supply of diamonds was kept artificially low, and prices were fixed. The market is becoming more open, artificial diamonds are replacing natural versions in industrial usage, and simulated diamonds supply some part of the jewelry market. But the value of diamonds is based on many of the same factors as gold.
There are plenty of other highly valuable substances that are not as well known, some far more valuable. In comparison to some, gold and diamonds are inexpensive.
As far as giving your wife or girlfriend something else, nothing beats precious metal and stones. Part of that appeal may be that they keep their value long after the love has gone.
I was always under the impression that diamonds are actually really fucking common but most of the world’s supply is controlled by one group so they can create false shortages, so to speak, and drive prices up.
It’s shiny.
It’s really that simple.
It is all a hoax. It really isn’t worth much at all. Go on, send me all of yours, I will dispose of it safely
I’ve been reading all the replies, but it’s the usual “It’s shiny and pretty” reasoning that I did not want. I guess I won’t understand. It lasts forever and doesn’t corrode?? A chunk of aluminum sitting on your desk will also be there long after you are dead. A piece of glass will also last practically forever. A sunset is also pretty and is free. A view of the Alps is pretty and it’s free. Gold will keep its value through good and bad?? Yeah, because we arbitrarily assigned value to it. Sorry, I can’t send you guys my gold and diamonds because I don’t own any. I rather buy more useful things. Looking forward to read more replies.
Yes, but both aluminum and glass are far more common than gold. (Imagine if the situation were reversed and we were buying gold foil in a roll in the supermarket in which to keep food.)
Yes, aluminum and glass are much more common, but I guess you didn’t read my long ramblings about gold. I know it is rare, but it’s still useless in application (asides from limited use in industry). Jewelry is the main reason it’s so expensive, because there is not a lot of it, but it serves no purpose other than “It’s so pretty.” So paying $3000 for what is essentially carbon atoms (diamonds) makes sense to you?? Not to me.
MEBuckner’s excellent answer is I’m afraid as good as it gets.
It was once valuable because it had unique properties that translated well into its use a medium of exchange. It is valuable today, useful properties as a conductor and such aside, in part because psychologically millenia of use as a fungible trade good has inculcated a sense of innate value that still clings to it.
We value gold because we can. You might as well ask why the sound you make when you say any random word, like say 'tree, refers to thing with branches and leaves. It refers to that, because we basically say so.
People spend a lot of money on designer clothes, and for all intents and purposes they’re often just as good as cheaper versions. Buying a brand is perhaps just as daft as buying gold, but the fact that people do make it worth something.
Do you also question why we value paper with the faces of presidents on them?
aluminum was as valuable as silver at one time
Slightly more complex, as others have noted, for a long long time it was the only one that when made shiny, it stayed that way.
You can make copper or iron really really shiny if you put a lot of care into it, but it quickly corrodes, where gold does not.
I don’t think you’re really asking “Why is it worth so much?” I think you’re just saying “It’s crazy that it’s worth so much.” Not much anyone can say to that.
Look, there’s a few things we value because we need them to live or to pass on our genes or whatever . . . everything else we value just because we like it. Gold is one of those things we value because we like it. Yes, we can enumerate the properties that make us value it – e.g., shininess – but there’s no particular reason for those properties to be important to us. They just are.
Or rather, they’re important to enough of us that the stuff ends up being expensive, because there’s a lot of demand relative to not that much supply.
You might think it’s nuts, but that’s human nature for you. I’m a vegetarian, and I could say “Why the hell would anyone pay for an expensive cut of steak”, but what’s the point? I know why they’d pay for it: because they like it, my feelings about the matter be damned. De gustibus non disputandum est.
Supply and demand. That supply is low is uninteresting, so you ask: Why the demand? Certainly the fact that gold bought for a high price can be resold at a high price contributes to its worth! Although almost all gold is used as jewelry or bullion, it certainly does have uses. For example, despite its high cost it is frequently used in electrical connections: its high conductance, ductility and corrosion resistance are better than any other metal.
There are metals more costly than gold, e.g. rhodium. The reason again is supply and demand, rhodium having some special uses, e.g. catalytic converter. Like gold, rhodium has been used a symbol of wealth: Paul McCartney was awarded a rhodium-plated disc!
I was intrigued to learn that iron was once a symbol of wealth far more valuable than gold! Tutankhamen’s tomb had small iron objects in addition to huge quantitites of gold; there was even a piece of iron in the Great Pyramid. (The recipe for cheap steel 3000 years ago was one of the most revolutionary inventions in history.)
it’s real simple.
humans have a need to use tangible goods as a conduit for emotional feelings in a cultural context.
you can’t use things that are so common that they lose their significance (i.e. a keepsake pebble isn’t very awesome as a universal, non idiosyncratic, symbol of significance) and you can’t use things that have too much practical use because the “useless” application will interfere with the economics of the practical application of the good (i.e. either too heavy industrial use will drive the prices down, rendering it insignificant as a “significance good” or the industrial use will use up too much supply, rendering the cost of the gift extremely expensive)
so, you wind up with tangible goods that are kind of rare, but also kind of useless. and they serve important-ish (way more so in the past than today, imho) functions as being physical icons of human emotions and cultural interactions.
and, since the more of this good you have, the more “emotional/cultural” “currency” you have available to deploy, everyone chases after it because to many people staying at the top of their social circle is an objective to them, the higher its value (again, with gold specifically, moreso back in the day when there was a relative paucity of other status-symbol consumer goods [like cars, houses, electronics, wines, artworl, etc. today])