Gold is agreed upon as a store of value. There’s always someone willing to buy it. You’re right that its intrinsic value as a material is lower than the actual price but people’s belief in gold is the same as their belief in a fiat currency.
The difference is that gold is a physical asset, so that no matter what the rate of inflation or the fluctuation of the market price if you have a tonne of gold you will always have that tonne.
Also it is not administered by a central bank with a political agenda.
Lastly gold is rare and finite. Eventually there will be no more gold to be mined.
I think the fact that it’s very chemically stable is likely a factor as well so it can be stored for effectively an infinite amount of time & it won’t degrade/react, it’ll still be gold.
Gold is agreed upon as a store of value. There’s always someone willing to buy it. You’re right that its intrinsic value as a material is lower than the actual price but people’s belief in gold is the same as their belief in a fiat currency.
The difference is that gold is a physical asset, so that no matter what the rate of inflation or the fluctuation of the market price if you have a tonne of gold you will always have that tonne.
Also it is not administered by a central bank with a political agenda.
Lastly gold is rare and finite. Eventually there will be no more gold to be mined.
I think the fact that it’s very chemically stable is likely a factor as well so it can be stored for effectively an infinite amount of time & it won’t degrade/react, it’ll still be gold.
Very good point.
Historically, the value of gold was tied to its “incorruptibility”. It is associated with purity and permanence.
Not if i shove it in the good old fusion reactor
Oh, look! An asteroid made almost entirely out of gold! T’would be a shame if someone were to mine it…