Investing

Why Does Gold Have Value?

If you’ve done any reading about investing in gold, you’ve probably read that one of gold’s characteristics is its intrinsic value. Of course, from the perspective of pure economics, nothing has intrinsic value. Goods only have value because people assign value to them. The value of a good is derived from the desire that people have to possess it. And enough people have valued gold enough over the years that the value of gold seems to be something intrinsic.

You’ve probably also heard many writers or financial pundits denigrating gold, calling it a worthless relic, a pet rock, or a remnant of the past. Yet there’s a reason gold continues to hang on, and even to gain popularity, especially during times of economic weakness.

That’s because gold has a number of qualities that made it first a popular monetary metal used in world trade for thousands of years, and now a popular investment asset. The qualities of gold that made it such a good monetary metal are the same as those that make it such a good investment asset.

  • Durability
  • Divisibility
  • Portability
  • Cognizability
  • Scarcity

And while gold doesn’t serve a primary role as a monetary metal today, it still shores up the backbone of the world financial system, as central banks around the world maintain holdings of gold just in case everything else goes belly up. You have to remember too that the 50 years of the floating fiat currency monetary system that exists today are but a blip in monetary history. If gold reasserts itself as the ultimate money, those holding gold could be well rewarded for their trust in the yellow metal.

Durability

It’s hard to imagine another asset that is as durable as gold. Just about all the gold that has ever been mined in all of world history is still in existence above the earth’s surface. Gold jewelry created by the pharaohs has been displayed in museums around the world, as bright and lustrous as the day it was created. Short of a massive explosion, there’s just about no way to destroy gold.

That durability led to gold’s acceptance as a monetary metal, as its resistance to wear put it head and shoulders above the alternatives. But that durability allows it to excel as an investment asset too. Gold won’t rust, tarnish, or corrode. It won’t deteriorate like paper money, and it can’t disappear into thin air like cryptocurrencies, online bank deposits, or electronic stock shares.

The fact that gold is a durable tangible asset is what appeals to many investors. When you feel a gold coin in your hands, you begin to understand why gold has value. And the fact that you can buy gold, store it yourself, and hold it in your hands whenever you want can give you great piece of mind in a world in which so much is ephemeral.

Divisibility

Gold is easily divisible, and gold investments are available in a wide variety of sizes. Under the gold standard units of currency were defined as weights of gold. Each $20 coin would have contained nearly one ounce of gold, a $10 coin would have had half that, a $5 coin have of that again, etc.

Today most gold coins and bars produced for investors are produced in a variety of sizes, with most being minted in troy ounces or fractions thereof. The most popular investment coins are often available in 1/10, ¼, ½, and one ounce sizes, while gold bars can range in size from one ounce to one kilogram. And for those with a lot of money to invest, you could always try to spring for a 400-ounce Good Delivery bar.

No matter how much money you have to invest in gold, there are products available to suit your needs. And the precious metals experts at Goldco can help you find just the right ones.

Portability

Coins have gotten a bad rap for being heavy, bulky, and inconvenient to use. But gold coins are incredibly compact stores of value.

You can hold $50,000 worth of gold coins in the palm of your hand. But the same amount of $100 bills would require five stacks of bills, something that you not only couldn’t hold easily in your hand, but would even have great difficulty hiding in your pockets.

And when you need to move that gold, it’s easy too. You could easily fit $1 million of gold into a purse or backpack, and be able to move it and hide it in any way you see fit.

Cognizability

Gold is also easily recognized, and can be easily be distinguished from lesser metals due to its physical properties. By looking at, feeling, weighing, or chemical testing gold, you can easily determine whether a coin or bar is authentic or not.

If you’re worried about the authenticity of your gold purchases, it can help to work with trusted partners like Goldco. Our relationships with mints around the world guarantee that the gold coins you purchase are authentic so that you don’t have to worry about buying counterfeit gold. And because gold investment coins are stamped with their weight and gold content, you can easily determine how much gold you own.

Scarcity

Scarcity doesn’t necessarily mean rarity, it just means that there’s not enough of a good to satisfy everyone’s desire for it at once. In the case of gold, all the gold that was ever mined throughout history could fit in a cube about 22 meters long on each side. For another point of reference, imagine a football field covered with a 7-foot tall pile of gold. Or imagine four Olympic swimming pools filled with gold. That’s all the gold that has ever been mined in the history of the world.

When you think about that compared to the size of the world, all of a sudden it doesn’t seem like so much. And when you compare it to the number of dollars in circulation, all of a sudden it doesn’t seem like all that much.

Get Your Hands on Gold

With these properties, it’s no wonder that so many people have trusted gold over the centuries. Gold has all the properties investors look for: steady value, durability, and scarcity. And that means that there’s always a market to buy and sell gold.

Gold also performs well when financial markets don’t, making it a great countercyclical asset, or a store of value for when times get tough. And with so many options to choose from, there’s a gold product out there for everyone.

Don’t let another day go by that your assets aren’t protected with gold. Call the gold experts at Goldco today to learn more about all the ways gold can help safeguard your wealth.

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