Why is Gold a Store of Value?

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Information about Why is Gold a Store of Value?

Published on February 21, 2014

Author: MGSRefining



This presentation explores the many practical reasons for why gold is considered valuable and why it has backed currencies for thousands of years.

Why is Gold a Store of Value? Compared to all of the other elements on earth, why did people decide that currencies should be backed by gold?

Gold, Precious Metals, and Other Elements • A lot of economists will say that gold is only valuable because people say it is. However, gold’s use as a store of value is more complex than that. • Gold is not the only element, nor the only precious metal. So, why did people choose to back their currencies with gold rather than, say, platinum or osmium?

Eligible Elements The periodic table lists all of the known elements in the universe. Let’s pinpoint why many of them are unsuitable for currency.

Gases Gases are hard to capture and contain, to say the least; definitely not suitable as a currency.

Radioactive Elements Then there are the radioactive elements. Not only do they pose a health concern, but they decay over time – so you could never build your wealth.

Reactive Elements A major problem with the rest of the elements is their reactivity. Iron (Fe) rusts, Cesium (Cs) explodes when it comes into contact with cold H2O, and so on.

Precious Metals This leaves us with just the precious metals. But, while they can be a store of value, there are other issues that keep them from being worthy of backing a currency.

Rarity Factor Ruthenium, rhenium, osmium, and iridium are far too rare to be practical.

Workability for Early Society Rhodium and palladium weren’t discovered until the 19th century, and platinum wasn’t discovered until the 18th century. But even if they were known, the refining technology wasn’t available, so they couldn’t be worked into coins and bars.

Gold vs. Silver This leaves us with just gold and silver. And while silver has been used as money, it’s not ideal. Not only does it tarnish, but it’s also too common. That’s why when its traded in the precious metals markets, it’s always worth much less than gold. VS.

The Value of Gold With silver ruled out, gold is the only element left that’s fit to back global currency. It couldn’t have turned out any other way!

About MGS Manhattan Gold & Silver (MGS) is a precious metals refiner that has been based in Manhattan’s historic Diamond District since 1985. We are a B2B company that buys and recycles precious metal scraps that accumulate in other businesses. We serve: • • • • • • • • Jewelers Pawnbrokers Dentists The industrial sector Antique dealers Machinists Domestic mining And more! • MGS also creates charts, calculators, and other online tools for our customers to use. • Try our Precious Metals Prices app, which lets you monitor the real-time precious metals market situation from anywhere, right from your iPhone, iPad, or Android device.

Recycle your Precious Metals for Profit • MGS accepts gold, silver, platinum, and palladium. • Payouts are based on the London Fixing. • Up to 99% payout (among the highest in the US) • Up to 98.5% for gold brought in for hand testing. • Not in NYC? Ship us your precious metals using our Ship & Sell service which offers: • Same day wired payment (once lot is received) • Discounted, insured shipping • Payout calculator

Connect with MGS • For amazing facts, history and news, read our gold and precious metals blog. • Join the conversation about precious metals on the MGS page on Facebook. • Follow gold, silver, and other precious metal trends at the MGS Twitter account. • Circle MGS on Google+ to hear our latest updates. • If you do business with us, connect with us on the MGS LinkedIn page. • To see precious metal melting and refinement in action, visit the MGS YouTube channel.

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