Completely off topic, but as a geologist, phrases like this are a bit like nails on a chalkboard:<p>>> "Gold is still rare, but it's also everywhere, roughly speaking. It's geologically distributed like this because it leaves the center of the Earth through volcanoes and other cracks. The Earth's surface has cracks all over it, so gold is all over it."<p>In context, it's innocent enough, but it's the sort of thing that makes me twitch grumble... (The phrase "fault line" provokes the same reaction... It's not a line! Just say "fault".)<p>The main part is that a) gold isn't everywhere. It's concentrated in specific areas. and b) Why add the "center of the earth" part in? That's just silly... Next, most(ish) gold deposits are probably sourced from metamorphic fluids rather than igneous activity. It's true that there is a major category of gold deposits associated with felsic magmas, and another associated with oceanic crust production, but way off base that "gold comes from volcanoes".<p>Next:<p>>> "Coming from the center of the Earth is going to ensure that gold has qualities not usually seen on the surface."<p>What?? Yes, gold is relatively nonreactive and relatively soft. That's because it's a noble metal. It doesn't come from "the center of the earth"... Yes, the core is probably enriched in gold compared to the crust, but the gold we mine at the surface doesn't rise up from the core. (In fact, it was probably added by meteorite bombardment after the planet was formed.)<p>At any rate, enough ranting. Neither of these have any bearing on the topic of the article itself.
Sorry but this theory is completely wrong.<p>Gold has value because it is a currency (medium of exchange) and money (store of value) due to the following properties:<p>a) Indestructible - bury it in your garden for fifty years, still the same.<p>b) Infinitely divisible - use it to buy a goat or the neighbouring kingdom.<p>c) Easy to detect adulteration<p>d) Stable supply (around 2% growth in supply annually since time immemorial)<p>e) No other use - Gold is terrible for most other things (swords, stirrups, axes....) so demand for it is purely for its value as a currency.<p>This is why rich people had a lot of gold - rich people have money and gold is money<p>There is one other very precious thing and that is diamond, basically the same except not divisible. Silver also caught on but not as much as gold. Pretty much every other metal lacked on one or more of the above properties.<p>Bitcoin is exactly the same, except you can send it over the wire.<p>Over the millenia, the properties people have looked for in currency have not changed.
Kinda off topic, but here's on Einstein's relativistic effects in gold atom, that give gold its glow: "Why is Gold yellow? Special relativity causes length contractions and time dilations in objects that travel at speeds approaching the speed of light. The valence electrons of large atoms such as gold have such high energies that their speeds actually approach the speed of light—and the relativistic effects on those electrons can become quite large.<p>Special relativity changes the energy levels of the 5d orbital in a gold atom so that the energy difference between 5d and 6s orbitals equals the energy of a ‘blue’ photon. Gold thus absorbs blue light when electrons are elevated from the 5d to the 6s orbitals, while other metals do not. These special relativistic changes to the energy levels of atomic orbitals are slightly different for each element.<p>Relativistic contractions on gold’s valence electrons (the 6s subshell) pull the 6s electron very close to the nucleus. Being closer to the nucleus makes the 6s electron less accessible to any potential reactants. Special relativity is not only the reason for gold’s yellow colour but also for its very low reactivity!"<p><a href="https://jameskennedymonash.wordpress.com/2014/07/13/why-is-gold-yellow-the-chemistry-of-gold/" rel="nofollow">https://jameskennedymonash.wordpress.com/2014/07/13/why-is-g...</a><p><a href="https://www.fourmilab.ch/documents/golden_glow/" rel="nofollow">https://www.fourmilab.ch/documents/golden_glow/</a>
Not to sound harsh, but are there any historical sources or references for this essay?<p>It's likely another <i>just-so story</i> about gold and the emergence of money from the barter economy.<p><a href="https://en.wikipedia.org/wiki/Just-so_story" rel="nofollow">https://en.wikipedia.org/wiki/Just-so_story</a>
Here is my serious question for Hacker News community: who the <i></i><i></i> upvote this piece of <i></i><i></i>? I mean, seriously, guys, why, in the name of all that is (even if marginally) correct, did you up vote this piece of fantasy?<p>I frankly don't think this piece of <i></i><i></i> deserve any more attention than the few minutes I spent insulting it, but I think my insults require defense. After all, they are probably less trashy than their target (in this case; note: I am generally against insult; but guys, I can't help myself). Here goes the defense (feel free to ignore it; again, just ignore this whole things to save yourself a few precious minutes):
1. Gold is among the most useful material on earth. It is impervious to any kind of oxidization, as well as soft and easy to work with, plus conducts heat and electricity superbly. This means that even the least developed societies can fashion high quality tools out of it (from bowls to utensils to weapon). The idea that somehow gold is useless (beside decoration) is beyond laughable.
2. Secondly, the idea of rich and poor within a lowly bartering-only society is also laughable (well, this one is slightly less obvious than the uselessness of gold). Wealth implies accumulation, which implies settlement, which implies (relatively) high food production capacity. By then, oops, you are talking about relatively advanced societies. There is one thing I have yet to find: a society with wealth that looks at gold with no more than amusement.<p>So, 1+2 means that a place where rich people only employ gold for decoration is a fantasy by idiots. Again, I am against name-calling, but this is just so.... Sorry, my bad. Anyhow, please save yourself and STOP UPVOTING IDIOCY.
Gold isn't useless, it's great for decoration, jewelry and small sculptures. For instance, because it's so malleable, you can easily turn it into a sheet and apply it to a sculpture, as the Greeks did.<p>We don't usually think of decoration as something that's worth a lot of money, but that's partly because we have access to so many cheap organic pigments. Before the 19th century, natural pigments could be very expensive and societies spent a lot of money on them (like the Greeks who painted and gold-plated their statues).
"Gold is not useful"<p>Gold is useful. Good thermal conductivity and low chemical reactivity with many corrosive compounds.<p>Using it for money and decoration is perhaps the least sensible thing.
Gold has some uses, but the utility value is far less than the monetary value.<p>The reason for this is a sort of religious idolization.<p>>When I was older, I learned what the fighting was about that winter and the next summer. Up on the Madison Fork the Wasichus had found much of the yellow metal that they worship and that makes them crazy, and they wanted to have a road up through our country to the place where the yellow metal was...Our people knew there was yellow metal in little chunks up there; but they did not bother with it, because it was not good for anything.<p>-Black Elk
The success of Bitcoin has led me to think that perhaps its concept of value is not wholly new, but rather illuminates how money has worked all along.<p>All my life, explanations of why gold is valuable have all boiled down to more intellectually nuanced versions of "Ooh, Shiny." But I suggest that gold is agreed to have value because of two traits it has which can be seen as analogous to traits of Bitcoin.<p>First, worked gold items like coins and jewelry represent a certain measurable and comprehensible amount of work. Not too much and not too little, in terms of available labor resources. Second (as I learned from the TV show Connections), the purity of a nugget of gold can be quickly estimated to a high confidence level by rubbing it on the smooth surface of a black basalt river rock. The deepness of the yellow of the streak on the rock immediately shows the quality of the sample.<p>So I believe gold is agreed to have value because to our ancestors gold artefacts demonstrated a certain amount of work invested, and the quality of those artefacts could be quickly evaluated with an efficient "proof of work" algorithm.<p>Why does "proof of work"=value in the Bitcoin ecosystem? In part because it guarantees a cap on inflation (thus preserving value while allowing appreciation), in part because dedicating valuable resources to mining represents a vote of confidence in the system.<p>I believe the simplest explanation for why gold has value is that there is nothing new under the sun, and analogous reasons applied when gold first came into use in human trading systems.
I liked this:<p><i>What really drives the demand for gold is the social aspect. The primary driver is that rich people accumulate gold and so are associated with it.</i><p>This is also why Chanel can charge $3,000 for a purse.<p>It's also why Apple can charge a premium. It's been a part of their marketing strategy from the beginning.<p>From pg 78 of Isaacson's biography of Steve Jobs:<p><i>The third and equally important principle, awkwardly named, was impute. It emphasized that people form an opinion about a company or product based on the signals it conveys. "People DO judge a book by its cover," he wrote. "We may have the best product, the highest quality, the most useful software, etc.; if we present them in a slipshod manner, they will be perceived as slipshod; if we present them in a creative, professional manner, we will impute the desired qualities."</i><p>There's a great deal of value in perception of value. If you have enough imagination to see value in pieces of paper with dead Presidents on them, then you've got enough imagination to see value in perception.
Gold is an accident of history. It's valuable because it's shiny, it was one of the first workable metals (gold jewellery dates back at least to Sumerian times), and it required effort to produce (too Marxian?). Also, royalty and nobles had control of most gold because they controlled the means of production. With the connection to wealth and power, it was then used as a medium of exchange because let's face it, shekels of grain are somewhat inconvenient. Golds value persisted because of its durability, history, beauty, but mostly because it was always in demand.
This reminds me about signalling theories in animal mating (reminder: we are animals too).<p>For example, the idea about the peacock's tail being a good signal precisely because it serves no other purpose (and in fact can be a burden!). It signals that the individual is so well off, he can afford wasting resources on such a "useless" ornament.<p>According to this story, trading actual goods for a useless ornament would be a strong social signal that you are so rich, you can afford to lose actual resources in exchange for mere ornaments.
This is written in extremely simplistic language, as if trying to explain to a small child - has it been through the Randall Munroe Thing Explainer filter?
Already the author is talking about barter and "protomoney" which sets off many alarm bells for me.<p>I encourage anyone interested in the topic of the origins of money to read "Debt the First 5,000 Years" by David Graeber.<p>AFAICT there is wide consensus among anthropologists that forms of "money" existed far in human prehistory, and barter was never common in early cultures.
Why Gold? Why not Silver? Gold isn't useless, as others have said. Silver's a lot less useless; it's used in so many useful things, and both gold and silver are currently undervalued.<p>I liked the article, although I was hoping to read more about its value as an investment, and how it's survived and thrived through all of our past depressions.
Good article. I'd like to nitpick, rich != power, just because you're rich does not mean you can hire people to steal gold violently for you. For that, you need followers. Without followers and having lots of gold just makes you a target.
A far better history of Gold and its relation to art:<p><a href="https://www.youtube.com/watch?v=grULH297m48" rel="nofollow">https://www.youtube.com/watch?v=grULH297m48</a>