Why do People Value Gold So Much?

From site called Eacology

Why do humans love and value Gold so much?

Colombian Jet Gold Artifact

Why do we love GOLD?  I was originally drawn to write this post after thinking about the gold prices and wondering if they will continue to stay high.  Or if eventually people will come to the realization that they're paying thousands of dollars for tiny rocks and move on to a more interesting investment, which would subsequently crash the market like has happened in the past with other assets.  And while there's ton's of research on the topic from a technical perspective, I wanted to investigate it from a more personal angle.

 

From as far back in history as we can trace, gold has been considered a precious asset.  And this lust for gold has not been unique to one culture or another, but it has occurred across cultures separated by vast distances, which indicates that the high value of gold was established even before we have historical recordings confirming it.   Significant gold artifacts include the intricate "Colombian Jet" (above) from ~800 BCE and the Bulgarian Varna Burial Tomb artifacts (below) estimated to have been buried ~5000 BCE.... Given that gold phenomena, I wanted to take a moment and reflect on the question of why do we humans love gold so much?  And how long that's likely to continue?  As well as whether a lust for Gold is simply baked into our human DNA after all this time...

You may have read the classic book The Alchemist, by Paulo Coelho and wondered if the concept of changing common elements from one of non value into one of extreme value was possible.  If you haven't read the book I would recommend it as it's an easy read and has a number of socially evolved gems of wisdom throughout.  I initially read the book because Tim Robbins said it was the best book he'd ever read, and I liked the movie Shawshank Redemption so I figured it must be worth the read (how about that for a bit of flawed logic...).   But it did turn out to be an interesting tale for the deeper meaning of life throughout, as well as the literary component alluding the idea that elements could be transmuted by some mystical process only understood by a select fraternity of alchemists (allowing a common peddler to become rich with gold.)

Prior to The Alchemist and after, I remained curious about when the act of scientific alchemy (turning lead into gold) would become mainstream, and possibly water down the worldwide value of gold.   We know that today Lead (Pb) can be transmuted into Gold (Au) by a "simple" nuclear reaction.  In fact, this has been performed as early as the 1950's and is carried out by tossing one element into a particle accelerator and smashing it into another particle in order to create a collision strong enough to swap a few protons and neutrons, and thus create the new element of interest.   But that said, we're still a long way from doing it in our living rooms or at any mass scale, because the process is very expensive, requires rare and specialized equipment...and the whole radioactivity thing freaks some people out.... (after transmutation some elements may remain radioactive).  

Gold's international cash value remains such an interesting phenomenon since gold in itself has little functional value (like other rare earth elements required for technological and industrial manufacturing for instance).  And unlike diamonds which have high stated value but little cash value, gold can be utilized quickly and easily for the value of its published market price.  We know that the world's monetary systems value gold prices as one of its primary standards, but if an inexpensive method for producing gold ever came about would it make waves in the international monetary community and crash the price of gold?  Or maybe that development in itself would cause it to be hushly purchased by a gold mogul so it could never make gold commercially and publicly have that market effect.  And if gold ever did become devalued, would we humans still see it in jewelery form and "have to have it"?  

Unlike 5000 years ago, we now have deeply rooted monetary systems (and yes they're corrupt and fragile) but gold's value is mainly based on fear of those systems crashing (and a whole lot of speculation in the meantime).  If monetary systems did crash, should we rather own real assets (water, canned goods, survival items) or a gold metal that supposedly has value in an artificial system?  There's no doubt that today gold is a strong investment and hedge, but my guess is that if a worldwide monetary crash occurred, people would be looking for other commodities (which would increase their value) over gold...

So maybe it's just me, but the fact that humanity still values gold so highly does seem a bit unevolved given our established systems of currency.  And I don't mean to make offence at the many gold collectors around the world, including most of my friends from India :-)  but it's just like the idea of spending $5000 on an engagement diamond sounds a bit crazy (essentially just pressurized carbon) when we can just as easily buy a nicer lab created Cubic Zirconia for $200 and give the remaining $4800 to the needy (or invest it in a commodity that the world really needs)...  Ultimately no one could argue that gold isn't typically a great investment, but instead my argument is whether it should be.  Maybe one day we will get to that, but for the foreseeable future humanity will probably remain more closely related to the man below.  What do you think?

Varna Burial Tomb Gold  |  Photo Source Unknown

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