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Investing: Why Gold Endures

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Investing: Why Gold Endures

In the manic market meanderings of 2021, it felt like every week the news brought with it a new asset or security that was the next it thing for ambitious investors. There was a dizzying number of cryptocurrencies that managed to make the headlines, with new contenders such as SHIB, Terra, and Solana sitting alongside established contenders like Bitcoin and Ethereum.

Then there are the NFTs, which seemed to take over the world and become one of the fastest investing trends of all time. On top of this, there were the fad stocks, the meme stocks, and all the rest. However, amid all of this frenzied activity, one thing remained solid.

We’re talking, of course, about gold. Although the price of gold waxed and waned in 2021, investor activity with finance and business remained just as constant as it always has. Gold has served as the lynchpin of the global economy for millennia and has been a cornerstone of any solid portfolio since the dawn of investing.

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So, why does gold ensure, and why will its inherent value be with us for a long time coming? Let’s take a closer look and find out.

Gold has enduring historical value

One important thing to remember is that no asset today has such a long historical use as a store of wealth as gold does. Since the very dawn of civilization, gold has stood above all other resources as an asset of crucial value and wealth. As the World History Encyclopedia explains, the Ancient Egyptians, the Minoans, the Byzantines, the Romans used as the primary store of wealth gold, and more.

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It also seems that, crucially, many ancient civilisations assigned value to gold independent of one another. It seems that, wherever gold was found in the earth, it was immediately elevated as a source of wealth. This is something that cannot be said of virtually any other asset or material in world history.

We culturally associate gold with wealth

The value of gold does not only lie in the ancient past. Part of the reason why gold remains one of the most important assets in the world today is that our culture consistently reproduces the notion that it holds inherent value and reinforces this at every level.

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There are countless examples of books, TV, film, and games that impress the importance of gold as a store of value. One incredibly illustrative example can be found within the world of casino gaming, itself a pursuit that is often driven by dreams of wealth.

To cite just one casino, let’s look at the Betway digital gambling platform. Simply by visiting the homepage, you will instantly find numerous games that focus on the motif of gold, as a means of impressing upon the customer the value of the cash prizes to be played for in each game. The slot on Betway go by names such as Gold Collector, Arena of Gold, Pots O’ Gold, Serengeti Gold, and Chicago Gold, and feature illustrations of the rare metal itself to evoke wealth and glamour. Just as gold’s history impresses its value on us, our contemporary representations of gold continue to reinforce this same value.

Investing: Why Gold Endures
Investing: Why Gold Endures 27

The psychological effect of gold

To get a better understanding of why gold ever became perceived to be of any value in the first place, it is also worth looking at the proven psychological impact that gold can have upon those who see and touch it. As explained in this excellent article by CNN, gold has always had an immediate psychological impact on those who see it in person.

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The colours are instantly evocative of warmth and security, while the unique shine that gold has seems to evoke feelings of whimsy, inspiration, and awe. It has been argued that this psychological effect is exactly why gold has been attributed as a creation of ancient gods and divine rulers since it feels so otherworldly and unattainable to us mere mortals.

This simple psychological effect probably goes a long way towards explaining why humans decided thousands of years ago that this lumpy metal had some kind of special value.

Chemical components of gold

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The value we assign to gold is not only historical, cultural, and psychological but also chemical. While the value we assign to gold is, by and large, a social construct, that does not mean that gold does not have some important chemical properties that distinguish it from other metals.

Most important, gold is one of the least reactive metals on the periodic table. It does not react with elements in the air, nor does it degrade and change color. This gives gold a kind of permanence that cannot be found in many other elements, making it ideal to carry around and to use as a lasting store of value.

This uniquely non-reactive nature of gold also lets people know that it is safe to carry around and store in large quantities since it isn’t going to explode or excrete some kind of toxic byproduct. Another physical quality of gold that provides much of its value is, of course, its rarity. As any investor knows already, an asset that is common and easy to obtain is never going to have much value.

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That’s why bitcoin, which has a strictly limited number of coins that will ever be in circulation, has more value than unlimited coins. Gold’s own exclusivity and difficulty to mine from the ground is exactly why it has such genuine, lasting value to those who own it.

For investors, the popularity of gold will wax and wane over time and according to the ups and downs of the economic calendar. However, there is no denying that gold will remain a store of value for centuries, or even millennia to come.

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