[cjdaly]

The article leaves out one big factor in why gold is valued. Similar to "why does the dollar have value?" (answer: taxes), a fundamental source of gold price support is that central banks all around the world - by longstanding official policy - horde gold (in metric tonnes) and treat it like a reserve currency/asset.

Central banks could change their policies in the future and (e.g.) sell all their gold for bitcoin. If that happens, gold price will go way down and I will look for a 3d-printer that prints with gold filament. :-)

[jvanderbot]

Circular: We value gold be cause we (banks) value gold.

It's not wrong, but it's not a "reason".

[dawguy]

The circular valuation is the primary reason its valued so highly today. Any article which ignores that isn't doing the topic justice.

Especially because there is a very solid reason the value grew so large to begin with. Prior to the invention of the electric lightbulb gold was far more beautiful than it is today (which was not discussed in the article). In candlelight gold will shimmer and gleam as the flames dance (with the red-orange flames accentuating the gold coloring). With electric lighting, the light provided is so consistent that gold is reflective but isn't any more more beautiful than a shiny steel appliance or clean marble countertop.

The combination of rarity and being the most beautiful material in candlelight made it the perfect material for kings and temples to collect to show off their status. And when the richest people in the world compete to collect something, it makes sense that the price is driven upwards.

In the modern world gold is still collected and stored as a symbol of status and wealth primarily because ancient kings valued it. Even if the driver of why they collected it originally has been greatly diminished.

(The idea behind gold's reflective properties in dim candlelit rooms comes from the book In Praise of Shadows which I would highly recommend)

[jvanderbot]

Its the primary continuation mechanism, sure, but doesn't explain the origin of golds value. That's all I meant. Any commodity has some pricing effect from traders evaluation of its tradability.

[cjdaly]

I think, like the dollar/taxes example, it is circular but self-fulfilling.

If you asked a central banker why they value gold, I suspect they would cite the "Rare but not too rare" and "Easily distinguishable from look-alikes" (in other words, hard to fake or counterfeit) points from the article.

And the average person, on learning an ounce of gold costs about $1780 (today), I think will perceive this as valuable - a small thing with such a high price. And if central banks dis-horde, the price goes down and the typical person sees it as less valuable.

[Doxin]

It's circular but still a correct reason. The reason people value gold is because you can sell it for a high price. Why can you sell it for a high price? because whoever receives it can also sell it for a high price.

Note that this isn't true for most things. If I buy for instance a car I don't expect to be able to sell it again for the same price.

So I suppose another way to word it is "Gold doesn't depreciate"

[imtringued]

> If that happens, gold price will go way down and I will look for a 3d-printer that prints with gold filament. :-)

Aren't you falling into the shiny metal trap? People absolutely love its appearance. Surely there'll be residual value left.

[osacial]

There are 3d printers out there, that are designed to print gold, but they all cost the same regardless of metal that you want to print.