Why do we place such high value to things such as gold and diamonds? Wouldn’t it make sense to put that value on things that are more “useful”?


Why do we place such high value to things such as gold and diamonds? Wouldn’t it make sense to put that value on things that are more “useful”?

In: Economics

Useful in what way? Those things are valuable as a form of currency.

You can look into the historical reasons we value these things but more simply, humans aren’t drive entirely by logic and what’s absolutely the most prudent for survival. We have evolved and developed a society that allows many to live superfluously and values certain material items that don’t serve any practical purpose. We’re social creatures that have evolved to value prestige.

It’s also worth mentioning that these things have a value backed by society. In fact, gold was what once gave the US dollar value. These things retain value well over long periods of time so it’s a reasonably good way to store wealth.

That being said, there are tons of important uses for gold, diamond, sapphire, silver, etc. in science and medicine. But generally, the quantities needed here are relatively small compared what’s produced so they don’t have a big impact on the market.

Gold and diamonds derive their value due to their rarity and therefore their value as trade items. Eventually, their value was described in denominations of paper money and coins which were more easy to transport and transfer in exchange for other goods or services. So, in reality, the rarer something is, the more value is placed upon it. Or something like that, lol.

A big part of the reason we put a high value on diamonds is because the DeBeers company a) advertises that diamonds are important and b) hoards piles of them to keep the supply low and the price high.

This was one big reason why DeBeers opposed lab created diamonds so strongly – to the point of threatening researchers. If any appropriately stocked lab could crank out diamonds more perfect than the DeBeers diamonds, then DeBeers’ vault of diamonds would be worthless.

Gold is rare and unique. Gold is very useful to convey value. It is not abundant, it takes labor to extract it, it has intrinsic properties that make it hard or impossible to fake or destroy, and of course it looks good. What else could past societies use to track their wealth? You said something useful, so what would it be? Were they supposed to rely on sacks of grain? It’s impractical.

In the modern world we no longer need to rely on gold to convey value, and we don’t. But it still retains its rarity, it’s properties, and it’s appeal.

Gold is expensive *now* not only because it is relatively rare but also because it is quite useful, especially in electronics. In the past it was valuable because it is extremely non-reactive and relatively easy to work with. If I give you an apple in payment, it is eaten, or it rots. If I pay you in gold today, your grandkids could inherit it decades in the future. This is especially awesome in a world where trade between countries could take weeks, months, or possibly even years.

On the other hand, [Diamonds are not particularly rare. In fact, compared to other gemstones, they’re the most common precious stone found.](https://www.truefacet.com/guide/makes-diamonds-valuable/). Diamonds are expensive [because of marketing and the power of monopolistic corporate practices](https://www.businessinsider.com/heres-why-diamonds-are-so-expensive-2015-9).

Useful things break or wear out, value decreases rapidly. Gold diamonds glass beads etc last longer

Gold and diamonds are shiny and pretty. And rare-ish. That’s enough to make them much sought after, and high priced.

Minerals do not inherently contain more value than any other objects. In economics it’s more a combination of capital or in other words resources and How well you use them. If you want to take something apart both a screwdriver and a hammer can serve the same purpose but if time is limited then the hammer is the better resource but if maintaining the parts is a high priority then the screwdriver has more value.

I’m no expert but I’m gonna guess it’s for the same reason Money is valuable. Like what good is a piece of green paper other than holding value. It’s not like we really barter in everyday items anymore.

The are commodities that allow you to show wealth and status. If the apocolypse comes, I want chickens, shotguns and shells, and fuel. Now I want a nice shiny thing.

Gold is the key one here. Why is gold valuable? Three factors come together: it’s pretty, which drives demand for jewelry, etc. It’s scarce but not _too_ scarce : demand can easily outpace supply, but there’s enough for everyone to know what it is and for it to have cultural significance. It’s inert: it doesn’t rot or rust, and it can be melted down and reformed over and over again. You can bury it in the ground and dig it up 1000 years later and it will still look the same.

All these things come together to explain why gold has been valued as a method for storing wealth for ages. It starts out with people digging up and refining gold in the early days of metalworking, and valuing it for its beauty. But it’s rare, so it’s extra valuable because more people want it than can get it. This just puts it on part with a huge amount of rare-but-valuable luxury goods that people have valued down through the ages.

But because gold doesn’t rust away or rot, it’s just really convenient as a store of wealth. If you have some gold you can be sure when you come back to it it’s still all going to be gold, even if you chucked it in a hole in the ground, even if it got wet, even if it got dropped or otherwise mistreated. There’s not a lot of things that work that way.
Try to store your iron coins and you may come back to a lump of rust, that’s not happening with gold.

Another really handy thing about gold is that you can melt and cut and recombine it without losing value. The mass of gold has the same innate value no matter what shape it’s in.

Gemstones in general are in a similar position as gold…they are relatively rare, pretty, and relatively inert. That gives them some of the same value. But gemstones (and diamonds in particular) are subject to more trends in fashion and supply changes (and monopolies) and they are also not as infinitely dividable and recombinable as gold. They are more of just your standard luxury good that people value because it’s rare and pretty. ”’

Now as for why we don’t put value on useful things:

We do put a lot of value on things that are useful…there are a number of metals that are more valuable than gold and have some niche industrial use. But things that are useful tend to not be as good for _stores_ of wealth. For one thing, useful things tend to be too common to make a good store of wealth. You don’t build an industry around a super rare material unless you have no other choice. More importantly though, the value of a useful thing depends on how useful it is, and that’s variable. Maybe someone finds a new way to make a widget without your expensive material, and the value plummets because that was most of the demand. Maybe widgets just get replaced by some new technology. The value of your useful thing could plummet at any moment due to technological change. Gold, on the other hand, has a few thousand years of appeal to people, it’s not likely to lose its demand due to some market shift

I feel like we do this a lot as a society. Why do we place high value on jobs like athletics and actors instead of on jobs that are useful to society such as teachers, first responders and social workers?

We put value on a more useful things as well. For example knowledge, like you learn or study and then get paid for that. But if somebody hit you in a head real hard you better have some gold or diamonds

“I will give you all of my gold for all of your iron.”

Yes, gold is useless in most applications. But it doesn’t corrode under natural conditions, it’s easy to recognize, easy to form, and is rare enough that you don’t have to worry too much about extra entering your economy and crashing it. Because there’s unlikely to be extra amounts brought in and unlikely to be used for other purposes than currency, it means you can have a decently regulated economy.

That would be logical, wouldn’t it? Unfortunately we place value on them because they are not useful, ie their only value is vanity.

Both are valuable due to scarcity. Diamonds are scarce because DeBeers has complete control over the market. Gold is scarce because it’s really fucking rare. We think she see gold everywhere, but if we’re able to take all the gold ever found on earth and bring it to one place, it would fill an Olympic size swimming pool more or less. That’s it. Over thousands of years of human history and gold mining, all we have to show for it is that relatively small amount. There’s just not much of it, and that scarcity is what makes it valuable.

A bunch of answers not really going after the real reason. Generally today economists use what’s called the marginal theory of value to explain prices. So the price for something is how much someone is willing to pay for one more of them. Useful things like water tend to be cheap because people have a lot of them so they don’t need a little bit more. Diamonds or gold are expensive because there isn’t much of them and so people will pay a lot for one more. Obviously, people have to want the stuff for this to work, but why people want things is pretty complicated and not really an objective question.

There’s absolute no reason except collective imaginary and that’s how capitalism work, making you believe that an inhert stone is more valuable than your own time and make you volunteer slave so you can afford it. Also gold has at least industrial usage, dollar is just paper printed by some entity backed by nothing and people kill for it.
If it’s useless but has value, then the value is just imaginary.