What is the fascination with gold?

It is an interesting material. It doesn't react chemically and therefore doesn't oxidize or degrade over time. It has high electrical conductivity as well as good optical reflectivity in infrared. It is malleable and easily worked and reworked. However it's importance and current value is more due to the cultural place it fills rather than a technical one in the modern world.

The lack of chemical reactivity, it could be argued, gives it a sense of permanency which is a rare thing in an ever changing world. It has been seen therefore as a constant store of value since ancient times. The idea of having gold for the days of Armageddon when modern society breaks down and all Fiat currency becomes worthless seems dubious to me. If I have a gold bar in my house in our current modern, functional society in peacetime, it is still not a trivial thing to get this converted into goods I can actually use (food, clothing, shelter etc..). First of all, you have to prove in some way that the material you have is actually gold. This requires assaying it in some way. Then you need to find someone to accept this block of metal and exchange it for something that is of actual use to you. In our current fully functional society, where all services and systems are running as normal, this is still not trivial. How would this look like in some type of post apocalyptic world where nothing is running or working? How many willing takers are there going to be for the block of metal in exchange for the rare food / clothing etc… they may be in possession of ?

What is the point in the trade in gold? As someone once said,1) from the perspective of an extra-terrestrial visiting our planet, you have one set of people investing a lot of effort in digging up and gathering this material in one part of the world, then transporting it with a great security effort to another part of the world to deposit it in another hole in the ground and then sit around guarding it. This does not have any positive economic impact for anybody. Nothing has been made, produced or accomplished in this exercise.

BUT, as long as people view gold as being a safe haven asset, then it becomes a self fulfilling prophecy and so long as people react in this way in their handing of gold, then it will fulfill this purpose. This does sound more due to the confidence level people place in the material rather than inherent value. This then starts to be similar to the paper currency risk, whose value is also based on confidence levels in governments that people think they are guarding against.


Warren Buffet? tbc
blog/gold.txt · Last modified: 2019/09/09 23:42 (external edit)
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