Why gold is a good investment – and why it is so expensive and rare


Why not just dig up more?

Gold has long been a popular choice as an investment. However, like metal, gold is too soft for many applications; it is the most malleable metal known. Gold is a good electrical conductor; Copper and silver are better and much cheaper, although gold is less prone to corrosion. However, none of the physical properties of gold justifies its extremely high value.

What really makes it so expensive and desirable?

Everything is connected with rarity. Gold is extremely rare. The total amount of gold mined in the whole history of mankind is less than 170,000 tons, this is enough to fill only 3 Olympic-sized pools. Compare this with iron production (which is almost 850 million tons per year) and aluminum production (just over 30 million tons per year), then you see that there is very little gold.

Thus, gold is a rare, valuable, highly sought after commodity because it has a high price. 50% of gold is used for jewelry, 40% – in ingots (in the form of coins and ingots), the rest – for various industrial and medical needs.

Centuries of alchemists have vouched for the fact that gold cannot be created from a complex metal. Gold is a chemical element, atomic number 79 and has the symbol Au (after the Latin name aurumwhich means “gold”). With the exception of noble gases, gold is the least reactive element known.

And it’s not that people aren’t looking to mine more, or that they’re just looking in the wrong place. It’s just that there isn’t much gold on the planet, period. And it’s not very much in the whole galaxy.

So where does the gold come from?

Gold is obtained when a star collapses and forms a supernova. This is such an exceptional event that in a galaxy with 100 billion stars the conditions for gold mining exist for less than one minute in each century. So if you have gold, it came from a distant star that exploded many billions of years ago. It’s on this planet because from there they also spat out the Earth.

What’s worse, 99% of all gold gets into the Earth’s core. If we could get all this gold, we could cover the whole Earth with a beautiful shiny coating about half a meter thick. But that doesn’t happen, and we get an amazing piece of gold thrown out by volcanic action. Many times geologists find gold, but it will cost more than it was worth digging up and separating it from other elements. Even if the layers were richer and more accessible, as in Roman times, miners had to dig up a few tons of material to get an ounce of gold.

Cleanliness and weight

The value of gold will depend on its purity and weight.

Purity is expressed in several ways. In jewelry, it is said in “Carat” (spelled “Carat” in North America), 24 carats – is pure gold. Ordinary metal (usually copper) is added to gold to make the metal harder, change its color or just make it more affordable. 18 carats is 75% gold, 9 carats is 37.5% gold. Ingots are usually valued from zero to one, so pure gold is classified as higher than 0.999 (99.9% gold), 9 carats – 375. Usually gold is certified and has trial marks or distinctive marks. Just make sure you don’t buy a block of gilded lead!

Weight is measured in number of units and you have to be careful to understand what you are being offered. Gold is often quoted in US dollars per ounce (e.g., $ 1,400 per ounce). An ounce here is a troy ounce, which is 31.1034768 grams. Beware that other countries use the word “ounce,” for example, an ounce of avoirdupois (popular in the UK, US and Canada) is 28.3495231 grams. You can find dealers who quote dollars per kilogram or euros per kilogram. The cost usually varies from hour to hour.

Long-term investment prospects

Although most countries have moved away from the gold standard, gold is still considered a safe haven for many investors. Long-term investment prospects are good, because due to the rarity of gold is unlikely to lose significant value. In the face of stock market volatility and international struggles, gold is usually a popular investment.

It will almost certainly be a rare and expensive commodity.