Inspired by this thread, in which it MEBuckner says,
Now, granted, I am sure that there have been a few extremely dire and close-quarter situations in which gold has been useless (on a lifeboat, say). But for the most part, gold has been recognized as a valuable commodity since before human history. Paper money from many, many countries, on the other hand, frequently winds up becoming completely worthless.
People make the argument all the time that “you can’t eat gold.” True. (I suppose if you were determined … I mean, it is a soft metal …) But except in situations where people are stuck in close quarters with utterly limited resources and no hope of escape for themselves (or the gold—to someone who could eventually spend it elsewhere) does the value of gold turn to zero. Even in Auschwitz, prisoners bartered their gold fillings for additional rations.
So, really, when has gold ever become worthless in human history?
According to Wiki, “Gold has been known and highly-valued since prehistoric times. It may have been the first metal used by humans and was valued for ornamentation and rituals.” Unfortunately, no cite for that. But, I think the rationale is that gold can be found in a pure state just lying in river beds, unlike other metals which may be embedded in ore and required smelting or other means of extracting them. So potentially, gold has never been worthless.
Doubtless, there have been times when the value of gold decreased. Perhaps there were even cultures that for one reason or another did not value gold. Hopefully, someone can dig up some information there.
However, in terms of gold as commodity since the 1800s here are the historical records (prices are per troy ounce, London PM Fix year average):
Lowest actual: 1931 - $17.06 ($230.30 in 2007 dollars)
Lowest adjusted for inflation: 1970 - $35.94 ($189.94 in 2007 dollars)
Highest actual: 2007 - $802.20
Highest adjusted for inflation: 1980 - $612.56 ($1522.72 in 2007 dollars)
The Aztecs used gold occasionally for decoration and jewelry, but never as currency, and they placed no special value on it. They were stupefied by the manner in which the Europeans lusted after gold.
Most pre-Columbian societies placed a pretty high value on gold, in particular as an indicator of status for the elite. It was both rare and pretty, so that having a lot of gold jewelry and ornaments showed you were a member of the upper crust. While these societies didn’t really use currency as such, gold could be traded for other valuable commodities - and, if you had a surplus of crops or fish you could enhance your status by trading it for gold. Other kinds of ornaments were also important, such as rare shells, animal teeth and bones, and so forth, but gold may have been the most significant.
While it is true that Europeans were far greedier for gold - because they did use it as currency - I don’t think it is really accurate to say that native American cultures “placed no special value on it.”
If the Aztecs did not place value on gold, it wouldn’t have been used at all.
Gold will always have value if it’s accessible, because it’s the most useful of all metals. It’s more or less chemically inert, so it doesn’t tarnish. It’s incredibly, almost mind-bogglingly easy to work with; if my memory serves, pure gold is in fact the most malleable and ductile substance known to exist in the universe. It’s a terrific conductor of electricity. It’s easily discerned from fakes, if you’re reasonably smart.
While it’s an exaggeration to say they placed no value on it, they didn’t hold it in quite the same high esteem as the Europeans. For example, there were fishhooks of gold, an application that would be unthinkable to a European. Fishhooks get lost, either when the line breaks, or the fish gets away.
Following the Spanish Conquest, the amount of gold extorted from the natives, and later mined, and brought back to Spain amounted to a veritable tsunami of M1 money supply. A long period of significant inflation in Europe followed. Evidently it doesn’t matter what your money is made of; if there is too much of it chasing too little merchandise, you get inflation.
In remote antiquity, silver was more valuable, perhaps because in pure form it was indeed rarer than gold.
I recall when I went to the Tutankhamun exhibition* at the British Museum that gold was all the rage in Egypt until iron was discovered/imported into ancient Egypt.
An iron dagger found in the tomb was placed in a position of far greater importance than similar gold weaponry.
*Disclaimer: I am 41 now and this factoid is dredged up from what I believe I was told by one of the museum guides when I was 5.
Is there evidence that those were actually used to fish with, rather than as symbolic representations or ornaments? There are plenty of examples of replicas of common tools or other utensils in gold that were never meant be actually used in practice.
I rather doubt it, myself. Gold is entirely too soft to be truly useful for such an application, and although it can be alloyed to make it strong enough, such a process was likely beyond their abilities.
“Most useful”?
Doubtful. If gold were as common as Iron, I doubt that it would be used for building skyscrapers or cars. It’s too heavy to be used as electrical transmission wires, and too soft for most structural uses. It is, however, pretty and durable, which fits it’s current use as ornamentation, currency, and electrical contacts.
That makes sense in that iron is far more useful as a weapon. It’s harder, and it holds an edge better. At the time, it was also a newly invented technology, so there would have been a great deal of status attached to it.
But gold is never going to be worthless. It’s far too useful.
It can be hammered into foil under human power. Or stretched into wire. It melts at a low temperature and is cast far more easily and with more detail than other metal. It doesn’t tarnish. It resists acid. It’s shiny and pretty. It can be found in its pure state or smelted very easily. It doesn’t rot. It doesn’t burn. If your cow eats it, you just hunt through the droppings to reclaim it.
It’s the most ductile and malleable metal, but I’d strongly suspect that there’s some polymer that’s more so. As for “most useful”, I can think of far fewer uses for gold than for iron, aluminum, magnesium, titanium, copper, or most other metals.
The numbers I reported were year averages. $1011.25 is the single day closing record for the PM fix, and $1023.50 is the record for highest AM fix, which occurred on the same day.
Eh, maybe “blind faith” isn’t right, but then it wasn’t right referring to dollar bills either. Gold is worth something because people think it’s worth something, the same as with paper money. Of course you might say the value of anything is dependent on people thinking it’s worth something; but there are things that would be valuable to Robinson Crusoe (because he could eat them or use them to shelter himself from the elements, or use them to obtain other things he could eat or use to shelter himself from the elements), and gold would be pretty damned useless to Robinson Crusoe.
Comparatively recently gold has actually acquired some worth to our civilization, for various industrial uses; historically, it’s been useful for the relatively trivial purpose of ornamentation–and mainly gold has been useful as a convenient store of wealth; as money.
I don’t even think it’s advantageous to have your money be “worth something” in a practical, build-a-house-out-of-it, have-it-for-dinner sort of way. Money is just a symbol of stored value. It’s a record that Thag had so-and-so many goats and Ogg had a bunch of really good flint arrowheads, and they traded back and forth for them, even though Ogg doesn’t even really like goat-meat, because he knew that Morg likes goat, and Morg makes really good, accurate bows (to go with Ogg’s flint arrowheads) and so on and so forth.
Gold started out as just another trade good, and not even a very useful one–it wouldn’t be something you’d want in a famine (gold fishhooks or gold arrowheads being pretty impractical)–but it did turn out to be very useful as tangible symbol of stored wealth, an abstraction made real (due to its durability and workability by people with comparatively primitive technology and Goldilocks sort of rarity–it’s not too common but not completely unobtainable either). Over the millennia, this primary use of gold as a convenient symbol of stored value has so permeated our consciousness that many people the world over think gold really is money, to the point where they’ll give you food for it in anything short of a famine, and where they’ll still give you useful goods and services for it even in times of war or chaos.
But–to the extent that “instrinsic value” even has any meaning at all–the “intrinsic value” of gold is fairly minimal.
What’s interesting is that one could say that gold has intrinsic value as a medium of exchange, especially in less advanced civilizations.
It’s rare enough that you can’t just dig up gold in your front yard, but not so rare that you can’t get enough volume to trade back and forth.
It’s non-reactive, so it lasts practically forever in it’s elemental state.
It doesn’t require complex smelting techniques, it has a low melting point and is easy to separate from other metals.
It is soft, easy to work with simple tools.
It’s more dense than just about any other naturally occurring substance, the ones that are more dense are more rare. You can’t fake density, this is a very important attribute for a medium of exchange.
If you were choosing to design a medium of exchange, I’m not sure what properties one would assign to it that gold doesn’t have.