Gold is a metal with a number of practical uses, yet the vast majority of gold ever mined has been consumed in three ways: as jewellery, as a financial asset for private households and as direct or indirect backing for the world’s monetary system.
“Gold is neither the rarest nor the most valuable metal,” noted the Hamlyn guide to rocks and minerals, “yet it is part of the foundation of trade and commerce.” It added: “Ancients who found native gold prized it.”
The Rarity of Gold
It is often said – accurately, as far as anyone knows – that all the gold ever mined would fit into the centre court at Wimbledon, rising just 30ft or so into the air. This rarity is a key attraction, given that gold is a chemical element; it cannot be made, only found.
It is also a very soft metal, and highly resistant to corrosion. Gold’s purity is measured in carats, with pure gold being 24 carat. This would make, for example, 14-carat gold about 60 per cent gold (the product of dividing 14 by 24).
Gold is found mostly in other rocks, chiefly volcanic rock, and because of the erosion of gold deposits by water, it is also found on the beds of streams – hence the panhandlers familiar from Wild West films.
Gold’s Industrial Uses
Gold’s industrial uses, while accounting for only a modest amount of total demand, are varied.
Dentistry is probably the best-known application, while gold is also used in electronics (where its conductivity is much prized), in the laboratory (where it is used as a catalyst) and in medicine – for example, gold-based drugs have been used to treat rheumatoid arthritis.
Gold as a Financial Asset
However, it is as a financial asset and store of value that make the best use of gold’s unique properties: its near-indestructibility (its boiling point is 2,856 degrees centigrade), its authenticity and its incorruptibility.
Because of these extraordinary qualities, gold is universally accepted as a medium of exchange and is the oldest continuous monetary asset in use. Across the centuries, it has held its value and proved its worth as a safe haven in times of trouble.