Gold is amongst the earliest metals to be discovered and coveted by humans. It is the only metal with a naturally brilliant yellow color, which other metals can get only through oxidization or different chemical reactions. It is universally recognized as the most valuable metal. This belief has existed for millennia and continues today due to its rarity, high market value, and unique chemical properties.
Gold is a rare commodity when compared to other metals. For instance, almost 15% of every rock comprises of aluminum, making it a typical metal. Also, aluminum is found on the surface close to the ground, making it easy to extract. However, gold makes up only five parts per billion of the Earth’s crust, and the miners need to extract it from more buried under the Earth’s surface.
The production of gold entails sophisticated procedures, which raises the total mining cost. After discovering the mineable gold deposits, extensive geochemical analysis, and exploratory drilling have to be done (Tardi). Moreover, the mining company needs to purchase an exploration license that adheres to environmental and legal regulations. After the gold core is physically extracted, some authorities require the company to renovate the mining area to be safe for human living. Hence, the cost of producing gold is more than what is needed to extract it. Markedly, gold is difficult, dangerous, and expensive to discover and mine, which increases the cost of production substantially.
Additionally, gold production is strictly controlled. The maximum amount of gold that can be produced annually is 2,500 metric tons (UCSB ScienceLine). This feature, combined with the global recognition of gold as a highly valuable metal, makes it easy to liquidate. These qualities also make it the metal that would be the most reasonable substitute for paper currency.
The price of gold is not set by a specific organization but depends on producing it, and the money buyers are willing to pay for it (UCSB ScienceLine). The metal is relatively more expensive to produce than other metals, increasing its base price. In case the demand for gold increases, there will be a competition on who gets the precious metal, leading to a rise in its price. If the demand decreases, the metal’s price will be lower and closer to the actual production cost.
The chemical properties of gold also contribute to its value. Gold does not oxidize in the atmosphere, does not irradiate or poison the holder, and is not flammable. These features make it more desirable than other metals to earn coins and jewelry (The Uses for Gold). Fifty percent of the total gold produced annually is used to make ornaments (Gold Demand Sectors), this is mainly because of its malleable nature. It can be easily stretched, pounded, and divided into fine, intricate designs. Moreover, many people perceive gold jewelry to be highly prestigious, which increases its desirability.
The high value of gold is accepted globally. Its malleability, rarity, and chemical properties make it one of the most sought after metals in the world, despite the high cost of production and selling price. Given that the production of gold is always controlled and cannot exceed a specific quantity annually, the metal will always retain its value.