Trying To Understand Gold's Intrinsic Value

Ill start by saying were in no danger of collapse.

That said hypothetically if it happened I dont believe gold would be traded or really even PMs in the massive chaos if the world fell apart. Even as things normalized goods would be traded ect since gold doesn't feed your family.

But long story short gold is valuable because we say it is. Air water and food are the only things with a real intrisic value that you have to have, everything else we assign value to as humans. Gold has always been viewed as valuable so weve kept that going. Places like India it has very deep cultural roots to why they want it.

Its not likely as a species well change our mind on gold any time soon. Its basic value is another way to store wealth. Whether its a bank, or you want some for your own ect. In todays world that is a risky buy, 10 years ago though there wasnt any downside to it as gold was about as low as its ever been so the potential to make money was there. People seem to feel better for some reason too if a bank or government has a just in-case supply of it.

Gold is its most valuable during bad economic times. During the uncertainty its where a lot of money gets put to store their wealth and protect it as opposed to risking it in a stock market thats bleeding people dry. During the great Depression gold hit huge values for the time as it was a safe place to keep money. When times are good the value comes down especially when theres no good investments at the time. When theyre bad or uncertain people and big money go to gold for the potential upside but mostly the security. Like weve seen bank returns are basically nothing during a down time so thats not really appealing, and the stock market was not a good place to be if you werent very careful about where you put your money when things were going down. So that either leaves mattresses full of 100s or PMs and if you have a lot of money more specifically gold.

Will we ever see hyper inflated gold prices, highly doubtful unless we do something really stupid and put the economy in a terrible spot. During the great depression it was as hyper inflated as its every been and still wasnt at those 10k+ prices. As soon as WWII ended and things were good again that price came crashing down.

Long story short while gold isn't necessary anymore from a use standpoint (except india and some middle eastern cultures for traditional things like weddings ect) its something thats easy to get and store unlike trying to stock pile oil which actually is far more useful today.

All valuable things have value because of supply and demand. For gold, "supply" is low because it's comparatively scarce (compared to, say, iron, lead and aluminium). "Demand" is high primarily for historical and cultural reasons; although gold has some industrial uses in which it is irreplaceable, industrial use is only a small percentage of total gold consumption.

Gold was one of the few metals known in ancient times. Its low melting point and unwillingness to react chemically with other substances mean it is a very easy metal to refine and purify, once you find it; it's the finding that's hard. But being a very soft metal meant it never had much practical use (for swords, ploughs, tools, etc); the only thing it could do well was sit around and look pretty. And pretty it does look, being one of less than a handful of metals that are naturally coloured. And its chemical resistance means it stays pretty-looking, long after iron, copper, lead and most other metals known to the ancients have turned into a corroded mess.

Because gold has been with us and had this function in civilization for so long, it's difficult to imagine breaking away. Every major religion and philosophy both praises gold for it's purity and beauty and condemns people for their greed in pursuing it at any cost.

Thanks for the very well reasoned responses. Many of these are things I have either concluded or read. I was asking because many seem to assign almost a magical property to gold for retaining value and for the most part that just seems to me to be based on tradition not anything intrinsic about the metal itself. I started wondering about this when I started trying to understand BitCoins which led to a larger understanding of currency which led me to the conclusion that anything that isn't used or consumed and is traded for good and services is a currency and then I stretched to all currency is Fiat currency. Layer on to that folks who bought Gold because of their belief in an impending collapse of the U.S. without regard to it's effect on the world economy or the fact Gold can't be digital transmited and it was hard to why some insist it will be used as a currency after that collapse. I could see that working if you lived in Cyprus and could take your Gold to countries with functioning economies after the collapse but with the U.S. position in the world economy it was hard to see how there would be any functioning economies left to flee to. It seemed to me if those predictions came true then guns, ammo, farm land and water sources plus a bunker would have been the investment to make. Good to hear that I don't think I am too far off base on this.

Gold has intrinsic value to humans because:

1. It is a rare element

2. It is difficult to mine

3. It is soft and highly malleable

4. It has a very unique color

5. It does not tarnish

6. Culturally, it has long been seen as way to safely store wealth

7. It is easy to transport thousands of dollars worth

Gold has a few sparing industrial uses. Not enough to justify its price alone (it's famous for being famous by now, really), but it's interesting what it's used for:

- Electronics: You knew this, right? It's not a great conductor like silver or copper, but it doesn't tarnish, so a thin plating helps protect copper wiring from chemical damage. This accounts for the vast majority of industrial use.
- Chemistry: Gold has some weird uses as a catalyst. Let's say you have tiny gold clusters of varying sizes (less than 100 atoms each). These break down carbon monoxide and convert it into carbon and oxygen. These gold nanoparticles are apparently used in some high-end gas masks. This area is still under heavy research, so we're bound to find some other weird uses eventually.
- Optics: Pure gold reflects infrared light very well. Another metal, germanium, is actually transparent to infrared. I couldn't tell you why, but if you only saw in infrared, think of all the shenanigans you could get up to with this.