Why is Gold Valuable? | Why is Gold so Expensive?

Gold has been valuable to humanity since ancient times and remains so today.

The rise and fall of advanced civilizations have gotten shaped by the pursuit of gold itself. The history of gold prices shows why gold is so valuable not only today but also in our long-dated past.

World history and the rise and fall of civilizations got dramatically shaped by the pursuit of gold itself. This rare yellow-colored precious metal has a more than 5,000-year history in its use for adornment and many multiple thousand-year records as money or a reliable store of value.

For many millennia, physical gold has insulated and insured human wealth levels. During times of arguably gold undervaluation timespans, this heavy inert precious metal can simultaneously provide its owners

with a way to not only protect but also increase wealth via prudent gold ownership and investment portfolio gold allocation.

In the nearly 4,000-year-old Code of Hammurabi, the world's possible first written code of laws, the word 'mene' was a term used to denote the weight of gold to be paid to resolve civil conflicts or resolve crimes committed. Thus a specific amount of gold (or silver) is perhaps the earliest written word for money itself.

Why is Gold so Valuable?

In fact, for most of written human history, the term "money" has always meant a standard explicitly defined weight and purity of gold and or silver.

To date from the turn of the millennium (2000 AD), the world has had a pronounced increase in gold's value-priced in every single national fiat currency issued by any government worldwide. The average gold price is called the spot price of gold.

On our website, you can track the gold spot price, both current and historical, and see for yourself how it has steadily been going up for decades.

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Prudent Physical Gold Allocations offer Investors:
- Investment diversification;
- Inflationary and deflationary wealth protection;
- Defense against possible Bank failures (e.g. Bank Bail-Ins, Bank Bailouts);
- Extreme financial liquidity (easy to buy and sell in all financial markets);
- A potentially undervalued asset class when compared to current valuations of stock prices, real estate, bonds, currency valuations, etc;
- A very private asset which cashless and digitally trackable trends have difficulty in tracing. - An 'old school' analog mobile store of value that cannot be hacked nor easily stolen;
- Fortune, which can be easily passed on to heirs and loved ones;
- Defense from both slow and even overnight fiat currency devaluations.
- A multi-millennial, inter-generational proven store of buying power

Physical gold bullion coins and gold bullion bars remain some of the only default-proof assets available to investors today.

Unlike virtually all other competing asset classes, gold bullion owned and held outright, cannot be made worthless by the failure of counter-parties.

Why Gold is so Valuable Today

The value of gold is not by mere human folly. It is more scientific and psychologically rational than any currency proxy or paper money ever dreamed up or invented. It is why about 1 in every 5 troy ounces of gold nuggets we humans have dug from the ground is still hoarded and safeguarded by government central banks around the world as gold reserves.

Regardless of what the world's future monetary system may become, the yellow metal's value will remain worthy. Not merely worthwhile for adornment and exchange, but also for usage as a store of value, or in applications for high tech medicine and aerospace. Gold's future preciousness, usage, and consumption are in essence guaranteed.

Often denied but covertly still, gold is the underlying bedrock and foundation of global finance. The world appears to be relearning why this remains so. Even former Federal Reserve board of governor directors allude to this unchanging fact of financial life.

Nowadays, gold investment translates into trading physical gold bullion. A few examples are a gold coin or a gold bar. Another option is to trade an ETF (exchange-traded funds) that is physically backed by gold bullion. It is also possible to invest in gold mining companies' stocks.

However, arguably the option that offers the most security and protection against default or counterparty risks is investing in gold bullion directly, as an investment commodity.

As we have mentioned before, physical gold investment corresponds to investing in the gold coin or gold bar markets. A government-issued gold coin could potentially carry a semi-numismatic value, so it could share a market with both investors and collectors as well.

On the other hand, a gold bar tends to have lower premiums over the spot price in comparison to a gold coin, so in a sense, it is possible to acquire more gold content per dollar invested.

The important thing about investing in gold bullion, though, is to make sure it is investment-grade. For instance, jewelry can contain different levels of purity (14-karat, 18-karat, 22-karat, and so on). But gold alloys for bullion should optimally be at least 22-karat pure (.9167 fine). And if you are considering using physical gold to fund a self-directed retirement account (IRA), favor .999 fine bullion (24-karat).

Why Gold's Valuable Future is Sound

Pure gold (24-karat) is molecularly permanent. It cannot get destroyed by fire. It does not corrode, rust, or tarnish.

Science theorists and astronomers now speculate that gold (and other precious metals) gets formed in the rare case of neutron star collisions and star supernovas who have ventured into the Solar System as asteroids and collided with earth billions of years ago, descending to the planet's core. We cannot make it in volume and mining is costly. Yet, demand for this valuable metal is ever ongoing. Almost half of the world's gold production gets turned into jewelry. which underlies its enduring value to come.

Gold is so fungible it can be broken down into nano-particles. Although rare, most industrial gold uses are recycled and recovered. Still, some applications cause some gold to be thrown out, unrecovered by human beings.

In the high ninety percentile, all the gold ever mined by humankind is currently still in our possession. Nation-states have owned and stored gold bullion for thousands of years, well before even the invention of fiat currencies themselves.

All private and public paper currency proxies stemming from gold (and arguably silver too) always end up defunct and worthless given enough time. Every derivative form of money we can name has a direct lineage back to precious metal monies like gold.

Given that we are living in a world with record debt levels globally, we can expect that gold bullion over the long term will preserve its value versus other less proven asset classes.

To learn more about the fundamental reasons for gold investing in the 21st Century, check out our free bullion investing guide.

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James Anderson
James Anderson
Senior Market Analyst & Content

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold & Silver Guides and has been featured on the History Channel, Zero Hedge, Gold-Eagle, Silver Seek, Value Walk and many more. You can pick up Jame's most recent, comprehensive 200+ Page book here at SD Bullion.

Given that repressed commodity values are now near 100-year low level valuations versus large US stocks, James remains convinced investors and savers should buy and maintain a prudent physical bullion position now, before more unfunded promises debase away in the coming decades...