Why is GOLD so precious? There are lots of prettier metals!
Gold, silver, platinum and palladium are considered precious metals and even in small amounts are very valuable. Last I looked palladium was worth $1,355 per troy ounce. These metals , especially gold, have been coveted for centuries for many different reasons, but why are they so volatile? Let’s look specifically at gold.
Gold is the most recognized and desired of the precious bunch. Gold is unique for its durability (it doesn't rust or corrode), malleability, and its ability to conduct both heat and electricity. It has some industrial applications in dentistry and electronics, but we know it principally as a base for jewelry and as a form of currency.
Here is the interesting part. The market determines the value of gold 24 hours a day, seven days a week. Gold trades predominantly as a function of sentiment—its price is less affected by the laws of supply and demand. This is because new mine supply is vastly outweighed by the sheer size of above-ground, hoarded gold. To put it simply, when hoarders feel like selling, the price drops. When they want to buy, new supply is quickly absorbed and the gold prices are driven higher.
Several factors account for an increased desire to hoard gold -
1. Global financial concerns: When banks and money are perceived as unstable and/or political stability is questionable, gold has often been sought out as a safe way to counter that instability.
2. Inflation: When real rates of return in the equity, bond or real estate markets are negative, people regularly flock to gold as an asset that will maintain its value.
3. War or political crises: War and political upheaval have always sent people into a gold-hoarding mode. An entire lifetime's worth of savings can be made portable and stored until it needs to be traded for foodstuffs, shelter or safe passage to a less dangerous destination.
4. An industry’s need for gold or not: We’ll use the dental field as a good example. Gold was widely used for decades before slowly being supplanted for porcelain or zirconia materials. It is still used, but not nearly as much.
More interesting facts about gold -
In 1869, the largest known gold nugget was found. It was over 2,300 Troy ounces or about 158 pounds (Today it would be worth almost $3 MILLION)
Just one ounce of gold can be stretched into a wire that would extend 50 miles or be hammered into a single sheet of more than 10 square yards
You are more likely to find a five-carat diamond than a single ounce gold nugget
Gold retains the title of being the most malleable element
It is Christian folklore that sailors wore gold earrings so they could afford a proper burial if their bodies washed up on the beach of a foreign country
The visor of an astronaut has a thin layer of gold to filter the harmful radiation of the sun
Probably the most interesting fact about gold is that it is indestructible. You can heat gold and it will turn into a liquid but it remains gold. When gold cools it would form a solid shape. Gold could be dropped in the ocean and left for years but when it returned to the surface it would still be gold.
Because gold is indestructible it WILL survive the cremation process and can be recycled to be used again. So don’t be a hoarder, recycle that post cremation gold! And all the other metals as well. It’s the right thing to do!