Why Is Gold So Valuable? 7 Reasons Why You Should Invest in This Safe Haven Asset

Why Is Gold So Valuable?

Whenever people are figuring out their investment options, they would certainly think of gold too.

It makes us wonder, “Why is gold so valuable?

Since the earliest of times, gold has been considered to be synonymous with riches. It has had a fascinating history as one of the most sought-after luxuries.

The royals used Gold as an ornament, lavishing their bodies, palaces, and sacred spaces. Gold has also been used as currency from the very beginning. Romans, Egyptians, and Indians have all used various forms of gold as currency.

Even with all the modernization, gold has still functioned as an asset that experiences a value hike in times of economic unrest. In fact, it’s the investor’s safe haven during market shocks.

In addition to this, gold’s modern value is boosted by its growing demand in various industries. These include electronics, medicine, and more.

Gold is valuable because of its beauty, utility, and scarcity. Here are 7 reasons why gold will retain its value in the future, too.

1. Gold Has an Eternal Appeal

Gold is undoubtedly the most attractive metal. There’s a reason why you often hear the term “gold standard” to describe the highest standard in anything.

Be it jewelry, other fashion accessories or interior decoration, gold has a special place among all other metals. It’s the epitome of beauty and brilliance.

The characteristic yellow hue makes gold stand out. This is because, among all other noble metals in the periodic table, it’s the only metal that doesn’t have a silvery color. One exception is copper. However, copper is vulnerable to environmental conditions as it corrodes and gets discolored under moist conditions.

2. Gold Has a Rich History

The world’s first gold coins were invented by King Croesus of Lydia to facilitate trade

The world’s first pure gold coins were created by the famous Lydian King Croesus in 550 BC. For the first time, the world saw uniform pieces of gold issued by a trusted authority. This led to the rapid expansion of trade between kingdoms and cities, and soon, Lydia became the first mercantile empire.

After that, gold remained the backbone for international trade and commerce for many centuries; it was in the 1930s that it was ceased to be circulated as money.

However, to date, gold not only holds its value, but it has dramatically boosted your purchasing power. In the year 1978, it was priced at roughly $193/oz. To buy a medium-priced new house in the US, you would need about 290 ounces of gold.

36 years later, you would have needed just 225 ounces of gold to buy a medium-priced new house in the US, and gold was priced at $1266/oz.

Therefore, historical data proves that gold is an excellent long term store of value that ensures against inflation and crisis.

3. Gold Has Unique Chemical and Physical Properties

Gold possesses a unique set of chemical and physical properties. It is one of the most highly malleable and ductile metals. Just a single ounce of gold can be beaten into a sheet covering 9 square meters of area. It has a very high thermal and electrical conductivity, making it highly efficient for thermal and electrical transmission.

Gold is also highly resistant to corrosion, oxidation and cannot be destroyed by water or heat (a minimum of 1945.4° F temperature is required to melt it. It can only be corroded by a mixture of hydrochloric and nitric acids. This is the reason why even old gold coins remain unchanged.

4. Gold Is Scarce

Gold may not be the rarest metal on earth, but it’s also not found in abundance. If all the gold ever produced in the world was melted down, it would fill just over 3 Olympic-sized pools. This makes gold rare.  

The scarcity of gold along with its tough mining process makes gold rare and valuable.

Adding more to its scarcity is the fact that gold mining is extremely difficult. Finding and extracting large quantities of gold is no easy task and requires enormous levels of heat and pressure. This makes the gold supply to be relatively short. All of these factors subsequently add to the inherent value of gold.

5. Gold Has a Number of Uses

Even though gold is primarily used as jewelry, ornamental items, and financial assets, its uses are not limited to these. Owing to its chemical and physical strengths, gold is a very practical metal.

Its most important industrial use is in electronics. A little amount of gold is used in almost all sophisticated electronics as it’s a highly efficient electrical conductor. This includes cell phones, computers, television sets, GPS units, calculators, among many others.

Gold is also used in the medicine and dental industry. Because it’s chemically inert, it is used in dental alloys, crowns, bridges and orthodontic devices. Radioactive gold implants are now being used in the treatment of different cancers. Surgical instruments and diagnostic aids also make use of gold.

NASA uses gold in a number of ways with every spaceship that it launches into space. Some of them include the manufacturing of connectors, lubricants, and conducting wires.

Gold remains unaffected by economic and political unrest or crisis, hence making it a valuable asset.

6. Gold Carries Financial Superiority

Gold has some special attributes that make it a highly valuable financial asset. Firstly, it doesn’t have a shelf life. It will never rust or corrode with time like other metals, so its value doesn’t depreciate.

Gold has remained comparatively stable over time compared to other financial assets.

Gold is majorly unaffected by the market or geopolitical factors like inflation, foreign exchange rates, or other commodities like oil. Therefore it holds or increases its value over long periods of time. This makes it attractive to investors when looking at the volatility and uncertainty of the stock, commodity or other financial markets.

These financial traits make gold an unmatched asset for long term investment and storage of value.

7. There’s No Counterparty Risk Involved with Gold

Gold is a unique financial asset for the reason that it doesn’t become someone else’s liability simultaneously.

This means that once you have physical gold in your possession, you don’t depend on anyone else to abide by a contract or fulfill a promise for it to hold its value. Almost all paper assets like bonds, exchange-traded funds, stocks require the other party to fulfill their end of the contract. This never happens with gold.

Gold doesn’t require the support of any bank, government, or brokerage company for retaining its value. Neither will it suffer from a default, nor will its value go down to zero.

Gold is the ultimate form of wealth. People have highly valued it for over 3000 years, and there’s no reason for it to lose its value in the future as well. No matter what social, financial, or political conditions prevail in the world, gold has never seen its value fall to zero.

Investing in gold is an excellent way to store value. The coins and chips you buy today will last forever.