Why is gold valuable?

[AlP]

Well it's quiet this evening so I'll post what's been on my mind today. I've been thinking about gold because it looks like we're headed into a gold bubble. Gold has been valued since early recorded history. It doesn't seem to be useful enough to justify it's price. It's used to make jewelry and suchlike. It has some industrial applications, though it isn't nearly as useful as other metals, like iron.

I think that the value of gold is not based on its utility. I think people value it just because it's gold. That would explain why so much of it is locked away in vaults rather than being displayed or used for something.

I think it might be because gold would be one of the first metals humans found. It exists naturally in metal form and you can just pick it out of the ground. Silver is also like that. Most metals, iron for example, exist in ore that needs to be processed to make metal. I can see why, way back, a human would think that gold was awesome and its rarity might make it valuable. Today an iPhone is more interesting but people still seem to think gold is very valuable. My thought was that the idea that gold is valuable might be one of the oldest memes.

 

[Will]

I've sold all my gold off (minus a watch and a family heirloom) to a few jewelry stores in the area recently because it would seem the moment Glenn Beck says to do something, you do the exact opposite.

So why is gold valuable? Rarity, followed by malleability, followed by pleasant appearance. Later, because it's a good conductor.

[AlP]

So why is gold valuable? Rarity, followed by malleability, followed by pleasant appearance. Later, because it's a good conductor.

Oh you're back Will. Hi! All of the above is true. But if I'm getting my units right, it's currently trading at $1124 for a 10 ounce bar. Do those properties really justify that price? I think gold buyers are being silly.

[Will]

I'm always farting around.  :crazy:

[AlP]

Oh I don't need evidence of that. Efficient market? Baloney. Most of the speculators don't even know that they're speculating.

[juliec0211]

I think it might be that gold was once use as currency and truly was something of value, and somehow our collective memories have a way of holding onto old ideas.  (Great granddaddy said something to grandma who said something to mom who said something to me, etc.)  I too sold all of my gold when it hit $1000 an ounce.  Of course, my parents thought I was crazy.

[AlP]

I think it might be that gold was once use as currency and truly was something of value, and somehow our collective memories have a way of holding onto old ideas.  (Great granddaddy said something to grandma who said something to mom who said something to me, etc.)  I too sold all of my gold when it hit $1000 an ounce.  Of course, my parents thought I was crazy.

So it's $1124 an ounce? Jeez.