October 17, 2008
We are living in challenging times. The state of the economy is depressing, and the unemployment rate is still rather high. We’ve all had to cut back on extra expenses, such as dining out, going to the movies, and planning vacations. Each of us as felt the crunch of the recession. But we’ve also realized that we all are stronger than we think. No matter how difficult things get, we all stick around—just like gold.
We all know that when times get tough, people turn to gold. But why is that exactly? Recently, one publication tried to answer this question and they had mixed results.
On the one hand, the writer concluded that having gold as a backup is just so ingrained into out culture that we can not help but look to gold in when the economy get shaky. So in that sense, our desire for gold is irrational.
But the article went on to cite some very good reasons why people seem to continue to go for the gold.
Gold is rare
We place a much higher value on things that are rare, as opposed to things that are readily available, like dirt, for instance. How much gold is there in the Earth’s crust? One part per billion. That means that gold is not in endless supply and that it is something that everyone can attain.
Gold is indestructible
Gold does not corrode easily or react easily to exposure to other metals and chemicals. Gold is much sturdier than say, paper money.
Gold is a tangible, physical commodity
Throughout the history of the world, people have used the accumulation of various assets as a basis for wealth. In rural and nomadic communties, livestock is a basis for wealth, but livestock grow old and die. Gold does not. And when it has outlived its usefulness in one form, gold can be melted down and remade into something else. You cannot do this with cattle.
Gold can be divided
Again, back to the livestock–you can divide a herd of cattle by the fairest means possible and it still won’t be fair. If I promise to pay you in gold, we have ways to measure the payment. With goats or cattle, you have to make sure you are getting a certain amount of healthy animals who are able to breed.
Once we left livestock behind, people did use gold as a basis for wealth, but even then they didn