The World of Gold, Why is It Valued?
Logically the grip of gold is absurd; economist John Milton Keynes called it “that barbarous relic”. Others have marvelled at the folly of digging holes and extracting the gold, only to dig larger, more expensive holes to burry it again. Not to mention guard it.
Of course, these views completely miss the fact that gold is the only universally accepted means of exchange. To understand its timeless appeal it is important to understand a little about this yellow metal.
Although the lust for gold can be traced back 6000 years to ancient Egypt, when gold was considered mystical; the physical incarnation of the sun god Ra’s skin. More recently, it is the versatility that recommends gold above all other metals.
Gold, like oil and other commodities is currently traded in US dollars, with the unit of measurement being the Troy ounce, equal to 31.1 grams with a minimum fineness of .999 per thousand pure (24K).
A single cubic metre of gold weighs an amazing sixteen thousand kilos.
It is so malleable it can be formed by hand, and even ancient goldsmiths could hammer gold leaf five millionths of an inch thick, (1/8 of a micron).
A single troy ounce can create a sheet roughly 10 metres square, or a length of wire FIFTY MILES long. It is such an outstanding insulator that gold plate protects the electronics of the space craft during launch, and from cosmic radiation while in space.
With an estimated total above ground supply of only 155,000 tonnes of gold, and fresh mine supply of about 2000 tonnes every year, there is not a lot to go around. Until modern times, when gold and silver were underhandedly removed from our coinage, have bankers been so loath to own it.
Legend has it that one London bullion bank would completely remove and burn its wooden floor every 20 years. This would capture the microscopic dust created as bars were moved and handled. Even today, the gold refineries will shut down to clean the soot from their chimneys to reclaim the tiny particles deposited by smoke.
Maybe gold is a barbarous relic in this age of paper transactions where debts, obligations and promises are accepted with unquestionable faith. Perhaps, in the not to distant future we will not have money at all, just secure cards with our DNA encoded against fraud or terrorists.
Looking to the future, I do not anticipate gold to be an investment. I believe, the golden age is behind us, and in the not to distant future strategic reasons will arise for all gold to be handed in voluntarily or forcibly.
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