What is the intrinsic value of precious metals?

I hope that I phrase my questions correctly. Why is it that gold and silver are linked to value, or why is it that we chose gold and silver to have a “worth” over another element or mineral? Is it simply based on the aesthetic qualities? Why not say, obsidian and quartz? Gold and silver don’t really DO anything for your average naked ape, so what’s the big deal about them?

They are rare, and used for a lot of things? As opposed to quartz, which isn’t rare and not used for a hell of a whole lot?

Gold in particular is soft and easy to work by people who didn’t have the ability to work with other metals - it’s found in a pure form rather than an ore, so it doesn’t require smelting (a rather advanced technology, really.) It’s soft enough to be pounded with small hammers into jewelry without requiring a hot oven, and its color was unlike that of other materials. The yellow color evokes the sun, which made it a valuable symbol in early cultures, and it’s rare enough that it can function as a medium of exchange or as precious jewelry. And it didn’t tarnish or corrode like most metals, which no doubt gave it additional mystical significance.

Of course nowadays, it’s also highly sought for certain technical applications, since it’s a very good electrical conductor (among its many other properties.)

Both those stones mentioned are and have been used as jewelry, but a precious stone has different uses than a precious metal - it can’t be pounded into a gilt on an object, or pounded into the desired shapes. Plus, obsidian is quite useful as a tool - it’s glassy and can be easily broken into sharp, hard blades, which probably diminished it’s utility as a decorative object.

Gold doesn’t corrode. It is soft and malleable. It can be found in its elemental form without mining. It’s shiny.

Copper can also be found in its elemental form, but it rapidly corrodes when exposed to the elements.

Most other metals require technology to reduce and refine them from ore.

You may be asking two questions. Materials have the value we assign to them depending on demand and supply. Lots of items have high value but not all are suitable for money or exchange.

Metal are easy to smelt unlike quartz or obsidian. Yes, you could smelt obsidian but it is a decidely non-trivial task. This makes metals portable. In the day of free coinage one could take a stock of silver coins and melt them down for a profit if the market value for silver was higher than the face value of the coins. When the opposite condition was true ingots could be taken to the mint and smelted into coins.

I’m sure there have been previous posts about why gold and silver are valuable; but to recap:

  1. Humans like shiny pretty thiings. Gold and silver and shiny and pretty (and so is copper).

  2. Humans with status and whatever passes for wealth in their society (cattle, grain, slaves, etc.) will spend some of their wealth on shiny pretty things for decoration.

  3. Gold and silver are compartively rare. Only wealthier people can afford to own lots of gold and silver. This makes gold and silver valuable trade items. Unlike say, gems, gold and silver are homogenous substances. Provided they’re pure, one lump of gold is like any other lump of gold of the same weight. No endless haggling over the quality of any one piece of gold or silver: just their purity and weight. A piece of gold or silver can be arbitrarily divided without destroying their value. Gold and silver don’t rot, don’t rust away (silver tarnishes a little), don’t require upkeep, aren’t expended in the course of being utiliized. Gold and silver are primary resources- you can find more, but you can’t manufacture them, so the suppy tends to be comparitively stable and their value can’t readily be undercut by overproduction. All these things make gold and silver very convenient to store and trade. In other words, they make good money.

  4. In fact, they make such good money that their value as * money* began to exceed their worth as purely ornamental items. Societies that had enough gold and silver that most transactions could be done with metal rather than direct barter could be more prosperous. Every item of trade could be counted as worth so much gold or silver, and something like a Market Economy becomes possible. This starts a feedback between valuing precious metals, obtaining them by trade, exploration or conquest, and using the metals obtained to further the economy of this expanding civilization.

  5. Before modern times gold, silver and copper were the only precious metals available. Gold is usually chemically inert- pieces of gold are found “native”. Silver and copper are sometimes found native, sometimes produced from ores. They can be melted or worked with simple technology. Platinum was available in the New World, but it is hard enough and has a high enough melting point that it was only usable ground up as a powder and used as a “filler” in gold. Europeans originally regarded it as a nuisance that made it easier for counterfeiters for fake gold coins. By the nineteenth century modern methods made it possible to produce other rare heavy metals, but they didn’t have the ancient reputation of gold and silver, and are priced according to their cost to extract and their value for chemical and industrial uses.

In addition to all the above, which are significant, silver and gold are the two metals with greater conductivity (for both heat and electricity) than copper. Though it’s a very minor use, they are the preferred conductors where copper would normally be used in devices that (a) must have a high degree of reliability, (b) are extremely difficult or impossible of access once put in place, or © will be used in places where copper might easily be corroded.

No, gold is actually quite a bit worse, comparitively speaking, than copper for electrical conductivity. See this table, wich compares various metals. Hard drawn copper is listed at 89.5, while annealed copper is 100. Gold is at 65, while silver is the king at 106. Gold is used on electrical connectors, not because it’s a superior conductor, but because of its high resistance to corrosion. Gold may not conduct better than clean copper, but it’ll conduct a lot better than corroded copper.

As is frequently the case, I may be confused.

Are you asking why gold & silver seemed to be a standard for making coins, and also a standard against which currency was based? Or are you asking why we covet gold and silver so much?

I would imagine that the first question is answerable from the premise of the second. Imagine an economy with no money. If there are four goods A, B, C, & D then we need prices for A against B, A against C, A against D, B against C, and C against D. With five goods, we’d need: A:B, A:C, A:D, A:E, B:C, B:D, B:E, C:D, C:E, D:E. That’s ten price ratios for five goods. The number of price ratios needed grow at an enormous rate.

But suppose there is a good that lots of people want, simply to have for the thing itself and not for its possible uses. If enough people want it that, even if I don’t want it in and of itself, I know that I will be able to barter it for something else so I’m willing to take it in barter, then it can become a numeraire commodity. That is, it is a commodity in which all other commidities are related by price.

When there is a numeraire commodity, say G, the prices are simply A:G, B:G, C:G, D:G, E:G, and comparing A to C is easy since G=G. There are very few price ratios in a money economy compared to a barter economy, and it makes it easier to sell or purchase goods because you don’t have to find someone looking for your specific product.

IIRC, silver & gold aren’t universal forms of commodity money. But they make good versions of it because they are, in and of themselves, desired, and when one uses them, they still remain. In the ancient world, one wouldn’t use gold to do mechanical work because other metals were better. They didn’t have electronics. Gold could be turned into ornamental stuff, but it could always be converted back into gold coinage quite easily. If we traded in seashells instead, well, what’s half a seashell worth? Gold can be separated into arbitrarily small units.

So gold doesn’t have value over other things, it has value universally because it can be traded for other things and it is relatively permanent. But if people didn’t like shiny things, then I doubt gold would have become the gold standard…so to speak.

In short, it’s valuable because enough of us says it’s valuable. If we had nuclear war next week, followed by economic collapse and anarchy, gold would rapidly become worthless. You can’t eat gold, or make a fire with it, or run a car on it, or shoot it through a gun. Beer, cigarettes, gasoline and ammunition would replace it.

Sure you can. In fact, the density of gold is considerably higher than lead, 19.32 g/cm[sup]3[/sup] compared to lead at 11.37 g/cm[sup]3[/sup], which means it would make very good bullets. It’s other physical properties make it quite suitable for the purpose, as well.

I’m just wondering how you can start fire with cigarettes. I expect Mk VII’s post-apocalyptic survival plan needs some revisions.

You pull out a pack of cigarettes in the post-apocalyptic world, I’m sure hundreds of people with lighters will run up to be your new best friend :smiley:

Seriously, thanks everyone for the answers. I think I got what I was looking for.

I wonder if I could get a license to run a store that sold just these four items. I’d be rich in no time.

ammunition would be the king, as it enables you to take all the other three from those who have them. :frowning: