Why is Gold So Expensive?
Why is Gold So Expensive?
Gold has always been the very essence of wealth, luxury, and status. From gold-plated supercars down to gold-covered steaks, this gold-colored metal has a very special place in human culture-from very expensive products down to everyday items like smartphones. But what makes gold so expensive? Curiously, many metals are rarer than gold, but end up being cheaper. So let's dive into what makes gold not just valuable but a prized asset across centuries.
Cosmic Origins of Gold
The story of gold began long, long before Earth itself. Scientists believe that gold was formed when two neutron stars collided in space, creating atoms of gold. These atoms, carried on meteorites, crashed into Earth around 3.9 billion years ago. In due course, Earth's bubbling, molten core slowly pushed gold nuggets toward the surface, making it accessible to human civilizations.
It is said that even in caves belonging to Paleolithic men, flakes of gold have been found which are estimated to be from roughly 40,000 years ago hence the first contact of humans with gold. It is due to all these factors that gold is termed a precious metal.
Properties of Gold
Not only is gold scarce, but it also has properties that make it highly in demand. Other metals are somewhat malleable, but gold is the most malleable of them all, meaning it can be shaped without breaking. Because artisans can shape it into intricate jewelry and sculptures, gold is used in other forms as well. What makes gold different from any other metal out there is its bright yellow color; no other metal has such an intense yellow color. For its aesthetic appeal alone, it commands a high value.
Also, gold is highly distinctive in its chemical aspect. This makes it highly conductive, perfect for use in such electronic devices as smartphones and computers. It also resists corrosion and rust, thereby making the value of gold highly usable in a lot of different industries, from technology to dentistry.
Gold's Cultural and Historical Value
It is also essentially embedded into aspects of our lives through gold's rich, cultural history that adds greatly to its value in contemporary times. Throughout history, gold has been considered the "flesh of the gods" by civilizations such as the ancient Egyptians. They made use of gold not only as currency but also to deck their tombs with, as a means of feeling closer to their gods in the afterlife. For example, the mummy of King Tutankhamun was encased in two pure gold coffins, which illustrated just how deeply the metal had been associated with royalty and religion.
Going further back to more modern times, the Coinage Act of 1792 even established gold as a standard of US currency. This was further popularized by the California Gold Rush of 1849, with the rush of thousands of people mining gold in San Francisco. These incidents further helped solidify gold's economic importance in the form of a currency and an investment asset.
The Challenges of Gold Mining
While gold has already been extracted, mining is a very long and expensive process. The chances of finding a place that contains enough gold to cover the mining expenses are less than 0.1%, which means highly speculative. Sometimes, it takes as long as 10 years for the development of a productive mine alone, involving teams of geologists, chemists, and engineers.
Additional cost factors are involved in today's mining companies because permission from the government and communities at large, in various forms, has to be sought after, further increasing the cost of production. While technology has gotten better, extracting gold remains a labor and environmental elixir, adding to its high market value.
Low Supply of Gold
Even though gold is everywhere- from jewelry and electronics to medical equipment-there is not that much of the substance on Earth. If all the gold ever mined were melted down, it would form a cube just 72 feet on each side. That's enough for every person on Earth to receive about an ounce of gold each, worth roughly $1,500.
Yet, the supply of gold significantly lags behind its demand. Of the 190,000 tons of gold available in circulation, more than 50% is used in jewelry, about 17% by central banks, and another 13% in industries of technology and dentistry. As more and more new industries increase their need for gold, its supply becomes all the more valuable.
Industrial and Practical Uses of Gold
This also adds to the cost of gold due to its versatility. It's used in medicine, architecture, and nearly every electronic gadget you possess. Even NASA lines astronauts' visors with it to protect them from harmful UV radiation. Its unbeatable conductivity of electricity and resistance to corrosion make it irreplaceable in high-end electronics, such as smartphones and tablets.
Gold's Future and Price
Despite these, particularly, thousands of years of mining, it is highly probable that finding new gold deposits is difficult to find. According to geologists, there may be another 55,000 tons of gold in the Earth's crust, which have remained undiscovered as of today. If the existing mining rate continues in the same manner, then, theoretically speaking, it could exhaust all its resources of new gold supply in the next 20 years or so. This dwindling supply, added to the increasing extraction costs, implies that gold could become even costlier soon.
Conclusion
Its high price is driven by its rare origins, unique properties, cultural significance, and difficulties associated with mining. Its bright yellow color, durability, and extremely varied uses- from jewelry to electronics make it highly in demand. As there are few remaining deposits on this planet, the value of gold will most likely continue to rise; it will remain a symbol of wealth and a good investment decision for generations to come.