What makes gold such a valuable metal? Part one

The former head of the US Federal Reserve System, Ben Bernanke, explains the high value of gold by established historical traditions. Is it so?

What makes millions of people voluntarily exchange their existing funds for precious metals? After all, it does not bring any monthly dividends, it cannot be eaten or burned in a stove to keep warm. However, it is such a valuable asset that one ounce of it, the size of a lump of sugar we put in our tea, is worth about $1,700 today. So why is the yellow metal so attractive and continues to form the basis of the financial and monetary system of the whole world for thousands of years?

There are five reasonable explanations for the fact that gold is so valuable now, and will be an even more valuable asset in the future, which we will give below.

Physico-chemical explanation of the value of gold

What makes gold a valuable asset is, first of all, its physical and chemical characteristics. It is they who transform this metal into the optimal material for use as money. In ancient times, trade transactions were concluded on the basis of natural exchange. With the development of civilization and the emergence of large cities, the need arose to introduce into use a universal equivalent of the standard value of a product, that is, money.

Anything can be used as a currency. But some items may be too inconvenient, bulky, difficult to store, or simply unsightly to look at. Gold is free from all these disadvantages. Therefore, over time, it became that very valuable asset that turned into money.

Let us compare gold with other metals in terms of physical, chemical and other properties. Here are the main differences that determine its high value:

1. The industrial use of gold is minimal compared to silver.
2. Gold metal has electrical conductivity comparable to copper, but is much rarer and harder.
3. Compared to palladium and platinum, which are used today in fuel catalysts to reduce harmful emissions from cars, gold, on the contrary, is more abundant in nature.

Humanity's choice in favor of gold, as money and the most valuable asset, from a chemical point of view is explained by the fact that, unlike other metals, it cannot be destroyed. It does not rust either in water or in air. Can be preserved as minted coins for thousands of years, and the details of the design will be just as recognizable. This metal burns in fire and melts only at a temperature of 1064 ºC, which is difficult to achieve in everyday life.

Unlike livestock, gold does not need to be fed. It does not require fertilizers and watering, like plants, and maintenance and repair, like complex equipment.

In terms of its metallic properties, gold is valuable due to its high malleability and flexibility. It is difficult to break, stretch or tear. In addition, its value lies in its rarity and beauty. Indeed, the entire volume of yellow metal mined throughout history can easily fit into two swimming pools. And its beauty is evidenced by the huge number of jewelry that bring aesthetic pleasure to their owners.

The above arguments regarding gold as a valuable asset are difficult to classify as traditions or prejudices. They are based on a scientific approach and common sense. Gold metal is also ideal for use as money, as plutonium is for nuclear bombs, steel is for railroad rails, and copper is for wires. No one will run trains on soft copper rails or make conductors for electronic boards from plutonium. Each substance has its own value and finds its unique application according to its properties.

What is it like

Gold is part of a separate group of precious metals.

Who knows, despising the mob and slaves, arrogant gold “does not want” to come into contact (chemical reactions) with other elements. It has always been precious - the beauty, brilliance, and durability of the metal were reserved for aristocrats and other favorites of fate.

Chemical and physical properties:

1. Pure gold has a very low hardness - 2.5-3. Anyone who has read books about history remembers that gold coins were often “tested.” Real coins left teeth marks, but fake ones (with a large amount of impurities, usually copper) did not.
2. Gold melts at a temperature of 1064°C; If you heat it to 2947 °C, it will begin to boil and evaporate.
3. The specific gravity of the metal is 19.3 g/cm3. A kilogram of gold will easily fit in a pocket or handbag - it can be easily “packed” into a cube with a side of 3.7 cm.
4. The malleability of the metal is amazing. Just one gram can be rolled into a sheet with an area of ​​half a square meter. This is "gold leaf".
5. For the production of jewelry, gold has another attractive property. The metal is very flexible and malleable, which means it bends and stretches easily.
6. The crystal structure of the metal lattice is cubic, face-centered.
7. Chemically, the metal is very inert. Under normal conditions it does not want to react with other elements. The exception is mercury.
8. The solar metal can be dissolved in “aqua regia” (a mixture of nitric and hydrochloric acids in a ratio of 1:3). Slowly, but reacts with cyanide, potassium iodide, liquid bromine.

Please note: your gold jewelry should be protected from iodine, mercury, and chlorine.

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The external attractiveness of gold for humans

Of all the chemical elements known to people, gold is the most attractive to the human eye. Nothing caresses and captivates the eye like this precious metal. This is another reason why it is so valuable and desirable, not only as an investment asset, but also as a magical, attractive substance. This largely determines the value of gold as money.

These properties, as well as man’s relationship with the yellow metal, remain unchanged for thousands of years! Surely, the Egyptian queen Nefertiti rejoiced in her gold jewelry just like some rich bride today.

How to buy a quality product

When the question is already closed: “Why is gold valued?”, we can talk about what you should pay attention to when buying products made from this noble metal.

First, find out the sample of the product and compare it with the sample on the tag. The jewelry must have a special stamp from the manufacturer - a kind of guarantor of quality and authenticity. Also, don’t forget to check the tag. It contains all the necessary information about the product, manufacturer, composition, weight, and so on.

Pay attention to the appearance of the product. Make sure that all fastenings and soldering points are of good quality. Also, there are no unevenness or pronounced defects in the jewelry.

The value of gold has developed historically

The statement that gold is a valuable asset is usually argued by financiers who prefer securities to precious metals. They have a mistakenly negative view of gold investing due to only taking the short term into account.

Let's analyze the price dynamics of the United States gold market from the beginning of the decline of the gold standard (1933) until its complete abolition (1971). All this time, the price of gold was steadily rising. A significant incentive for this was the permission of free trade in them.

To understand even better the value of the yellow metal and the stability of its purchasing power, let's look back centuries and millennia.

2000 years ago, during the supposed life of Jesus Christ, a Roman had the opportunity to purchase good-quality sandals, a leather belt and a toga for a gold ounce. Today, the same amount of gold has a value equivalent to a pair of expensive shoes, a formal suit and a leather belt.

Even earlier, in Babylon under King Nebuchadnezzar in the 4th century BC, a golden ounce was exchanged for 350 loaves. Now for 31.1 grams of yellow metal you can also buy at least 350 bread rolls.

If we consider how valuable an asset gold is in relation to real estate, then in the 70s of the last century, with the cost of an ounce of the precious metal being $193, a family home in the United States could be bought for 290 ounces. In 2014, with the cost of an ounce of the yellow metal already $1,266, the same house cost 225 gold ounces. And the remainder of 65 ounces could be spent on buying a car and installing a swimming pool.

It turns out that the value and purchasing power of the gold metal not only did not decrease, but also increased.

Today, paper national currencies have supplanted such a valuable asset as gold in the struggle for the right to be considered real money. Although the value of the banknotes is not backed up by anything other than promises of liquidity from the issuer. Even very recent history provides us with plenty of examples of how unreliable such promises can be. So should you blindly trust them?

The situation with securities is the same.

Government bonds and shares of companies from a century ago are now very likely to have lost their value. We are not saying that you cannot invest in them. It's just that different valuable assets have different purposes and must be viewed from a different time perspective.

The value of gold lies in its ability to save savings over a long period of time, as well as its ability to insure against risks associated with the economic crisis and inflation. It has been historically confirmed that these characteristics of the yellow metal have remained unchanged for thousands of years.

Absence of dependence on circumstances and actions of a third party

Physical gold is the only valuable asset that is not someone else's liability or promise. It does not depend on bank, government or brokerage support. Its value cannot be harmed by default, monetary inflation or political instability.

If you own yellow metal, you do not feel dependent on someone who can refuse their obligations. There is no so-called counterparty risk in this case.

Any manipulations and transactions with assets in the form of securities, investments in exchange-traded funds, shares, etc. always provided by some third party. Having gold coins in your pocket or bullion in your home safe makes you independent from anyone.

Category: question-answer

Is it true that gold makes a person happier and more energetic?

Expert opinion

Grishanov Mikhail Petrovich

Jeweler, director of the Grishanov and Co. workshop

Is it true. It is a symbol of wealth and power and makes a person feel happier. In addition, esotericists claim: the noble metal has the ability to endow its owner with positive energy.

Is it possible for children to wear gold all the time?

Expert opinion

Pribrezhny Gennady Valentinovich

Jeweler 6th category

It is believed that the child’s biofield is more open and unprotected, and therefore can be more often exposed to extrasensory influence from the outside, also through gold items. Children are advised to wear some jewelry, such as a cross or earrings for girls. If these are other people's jewelry, for example, inherited or donated, they need to be energetically cleansed. Jewelry must be removed at night.

How to clean gold not only from dirt?

Expert opinion

Grishanov Mikhail Petrovich

Jeweler, director of the Grishanov and Co. workshop

If the jewelry only needs to be cleaned to remove dirt, you can take it to a jeweler who will do it delicately. You can cleanse gold jewelry from bad energy at home using fire, salt or water. Home or church prayers are also great for removing negativity from jewelry.

Financial benefits

As a valuable asset, gold has the following advantages:

• it does not disappear over time, the entire extracted volume continues to be used;
• not subject to corrosion and rust, no expiration date;
• does not depend on the counterparty fulfilling its obligations.

The value of gold as money is determined by its liquidity, ability to quickly convert into cash, high concentration of value in a small volume, independence of price from division into parts, durability, uniformity and confidentiality.

The yellow metal cannot be printed like banknotes, counterfeited, devalued, or produced in any quantity required by the Central Bank. It is the most valuable asset precisely because it has distinctive superior characteristics in comparison with other financial instruments.

Will gold remain a valuable asset in the future?

The intrinsic value of gold is indisputable and does not depend on external circumstances. That is why the continued value of the yellow metal in the future is beyond doubt.

For more than three thousand years, gold has been the most valuable financial asset for people and the ideal embodiment of money, regardless of individual critical opinions. This historically established state of affairs cannot be changed by any economic, political or social cataclysm. The investment value of gold remains unchanged.

Is there a single security, currency or asset that has lasted over a thousand years? Nothing other than gold is optimal for accumulating and saving capital and diversifying investment risks. Gold bars or coins purchased today will outlive you, your children, grandchildren, great-grandchildren and will not become less valuable during this time.

Humanity has made its choice, and its correctness is confirmed by history. Today you too can touch eternal values. To do this, you just need to take advantage of the available opportunities and invest in gold coins and bars as the only consistently valuable and reliable asset.

Energy abilities of gold. Methods for cleaning metal from negativity

It is believed that gold, due to its softness and pliability, easily absorbs energy. Many superstitions are associated with this: it is undesirable to wear other people’s gold jewelry, you cannot use found jewelry. Esotericists recommend periodically cleaning solar metal products. To do this, it is best to use the resources of the four elements: Air, Fire, Water and Earth:

1. Prayer is a sound message directed to the Higher powers. Having secluded yourself in a separate room and placing the items in front of you, you can read the prayer for cleansing yourself. Gold items are also cleaned in church with the help of prayer.
2. Fire. It is possible to cleanse jewelry from negative energy with the help of a candle, both church and ordinary. The product needs to be held over the fire for a short time; its effect can be enhanced by prayer.
3. Water - holy, running or spring - also perfectly cleanses gold of negativity. Jewelry is kept in liquid for a certain period of time, for example overnight.
4. Salt can draw out all the negativity from objects, which is why it is so useful to wash with salt water and wet clean the house with it. For example, if you need to clean a ring or earrings, they are completely covered with salt and left for a day. The used salt is then buried in the ground.