Why is Gold so Expensive?

Gold is certainly influential and valuable, but how much weight does gold actually carry? There are both economic and scientific reasons that explain why gold remains a viable alternate source of currency even today.

Economically speaking, the value of gold will go up if the value of the American Dollar goes down. It takes considerable amounts of dollars to buy gold at the same value. It also helps that gold doesn't pay interest. Gold is a somewhat difficult resource to find, but not impossible. Gold is easy to store and easy to transport.

Gold served as a reliable alternate currency that backed the American Dollar for a long time until President Richard Nixon decided to cut off all ties with the gold standard in 1973.

Along with silver, gold is a financial shield for investors as they can put their money into gold as a protective safe haven in case currencies like the American Dollar take significant hits in value. Gold is a rich commodity that is very rare and it's fairly expensive to produce.

  


Considering this fact, the base price of gold will be set fairly high, and in addition to investors competing against one another to obtain as much gold as possible, the price of gold can only be driven up. With the current economic conditions that we are seeing around the world today, it is hard to comprehend a situation where gold prices would drop very much.

Compared to gold, other elements like aluminum and iron are much easier to find and cheaper to produce. Aluminum makes up 8% of the Earth's crust while iron makes up 5% of the Earth's crust. There are 3 important factors that determine how valuable gold can be, which are abundance, popularity and work. In most cases elements that are very abundant will be cheap in value. However, because of its popularity, gold maintains its high value. For miners who spend significant amounts of time in finding gold, the work that they put in will also play a role in determining the value of gold.

Gold typically works well as a currency when it is relatively stable in volume. If you were to buy gold today, hold it for a year and then turn around and sell it, because it is backed by nothing, if the American Dollar takes a hit in the economy, the value of gold would go up. In other words, it is wise to hedge your bets with gold as a bargaining chip if you are attempting to make a profit.

At nearly no cost gold is very simple to have tested when it comes to its purity. Thanks to its proven track record throughout history, gold is globally recognized and trusted.

How much gold you can buy at any given time depends on when you buy it, since its value is constantly changing in the marketplace. It is up to you as a buyer whether or not you have a pressing need to buy gold, and to time the market when prices seem unusually low.

According to a recent Gallup poll, gold was rated as the best investment “regardless of age, income, gender or political party” by 34% of investors in the United States. Whether this is actually true or not, it does show how much of the population considers precious metals to be a safe, secure investment.

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Scientifically speaking, gold is a metal that doesn't oxidize and keeps a consistent weight. In comparison to gold, iron will rust after it oxidizes and copper will gain weight after it oxidizes. Gold is superior to silver for one good reason, which would be that gold is non-toxic whereas silver tarnishes due to the minute amounts of sulphur in the air that develops in the oxidizing process. When Spanish shipwrecks are discovered containing gold and silver coins, the silver will be dull and tarnished, but the gold coins will glimmer as bright as the day they were minted!

Gold also carries an advantage in density. For example, if you happen to accumulate 130,000 metric tons of gold, you can fit all that gold in a single a 100 foot cube space. Gold is generally easier to handle and carry compared to bags of rice or barrels of oil. So storage of gold is simple, another reason that it is highly valued by investors as a real investment.

Often preferred for being a great conductor of electricity and heat, gold can be made harder in the act of alloying, which is to mix two or more different metals together. Even after alloying, however, gold will remain resistant to corrosion. Variants of gold such as rose gold and white gold are produced because of alloying. This is the reason why gold has been used for jewelry by early civilizations through today.

Ultimately, it is the combination of rarity and beauty that has elevated gold to the high standards that it is at today. There is no other element on Earth that comes close to the generally accepted appeal as a precious resource.

Also Read:

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Where to Find Gold in all 50 States

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