Ive never been able to understand the concept of gold. Why is it so valuable? How do countries know that the amount of gold being held by other countries? Who audits these gold reserves to make sure the gold isn’t fake? In the event of a major war would you trade food for gold? feel like people would trade goods for different goods in such a dramatic event. I have potatoes and trade them for fruit type stuff. Is gold the same scam as diamonds? Or how is gold any different than Bitcoin?
In: Economics
Gold has three main properties that makes it valuable. It’s rare, it doesn’t rot and it’s attractive to the human eye.
When the main value in the world is labour, you’re going to want something that everyone recognizes as a common token for the labour. Money, in other words. Gold is hard to deflate (it’s rare), it’s easy to make coinage (it’s softer than many metals) that doesn’t rust (unlike silver and copper that corrode easily) and it has a really nice shine to it. It’s relatively easy to judge the authenticity of gold when compared to other metals.
As far as value during times of crisis, I’ll borrow the words of Moist Von Lipwig:
“[A] potato is always worth a potato, anywhere. A knob of butter and a pinch of salt and you’ve got a meal, anywhere. Bury gold in the ground and you’ll be worrying about thieves for ever. Bury a potato and in due season you could be looking at a dividend of a thousand per cent.” ~Terry Prachett, Making Money(Discworld #36)
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