Why Do We Value Gold?

Historically, governments and investors have revered gold. Justin Rowlatt of the BBC News questions the reasons behind this value while also reporting on the British Museum’s exhibition on pre-Columbian gold artifacts. A chemistry professor quoted in the story points out that gold is distinctive. Gases, alkaline metals and other elements are simply too unstable or difficult to smelt. Gold is chemically uncomplicated and less reactive: “Gold's relative inertness means you can create an elaborate golden jaguar and be confident that 1,000 years later it can be found in a museum display case in central London, still in pristine condition,” Rowlatt writes. The metal is rare enough, with limited supplies in recent years, so that it can no longer be relied upon as a major currency. “The demand for gold can vary wildly - and with a fixed supply, that can lead to equally wild swings in its price,” Rowlatt notes. Governments operating in a complex global economy with so many trades and payments have little choice but to rely on the rule of law and markets to determine currency values. – YaleGlobal