For as long as human eyes have glimpsed upon gold, human minds have been obsessed with its luster. The love of gold transcends virtually every civilization that has ever came to be, and to this day the precious metal continues to drive a large portion of the global economy.
For most people, their association with gold is fleeting – in the form of rings for a woman, rings for a man, and any other small-scale trinket. But for a select few, gold is a huge industry with enormous payoff. At a time when the inventions and tools created by humans are far more useful and exciting than any naturally occurring rock could ever be, the question must be asked: what is the true value of gold, if there is one, and why is it still so high in the year 2011?
There’s no arguing with the fact that gold is an extremely limited resource – with some estimates putting the entire world’s sum of gold safely packed inside one-third of the Washington Monument. There’s also no arguing that it’s a particularly fascinating and original element: despite being one of the heaviest metals around, a matchbox size chunk of gold can be flattened to the point where it can cover a tennis court. In addition, there’s no challenging the idea that gold has it’s functions – whether that’s conducting electricity or reflecting electromagnetic radiation.
But as a monetary exchange and an investment, serious doubts arise as to the true value of gold. Surely by now you’ve seen advertisements telling you how wise of an investment gold is during a tough economy – and these companies aren’t exactly lying; big-time investors often turn to gold as way to hedge against inflation, as gold is viewed as a timeless currency. However, believing this applies to small-time investors and those concerned about the future state of their finances is a questionable opinion to have no matter how much economic expertise someone has.
That’s because not only are the gains of gold almost impossible to get on a small-scale, big-time investors only rely on gold because it remains an incredibly valuable and limited resource, at least seemingly so. As long as this remains the case, its value is preserved, and it can continue to act as insurance against wily inflation. But if everyone got into the gold business, this allure, which is what drives the current price, will only fall.
Why? Because gold is only as valuable as what the next person will pay for it. Unlike medicine, or technology, or services – which possess within themselves a measure of value that is nearly impossible to alter – gold is just, well, gold. It’s a shiny pretty metal that provides some limited function in society but otherwise is just notoriously awesome, and everyone knows that everyone wants it. This is the shallow reasoning behind the value of gold, and the reason why gold is a bad idea for small-time players looking for long-term gains.