Eli5: What makes metals (Gold, Silver, etc…) profitable? Isnt it just a piece of metal?


Eli5: What makes metals (Gold, Silver, etc…) profitable? Isnt it just a piece of metal?

In: Economics

I believe it has to do with rarity. Diamonds are so rare because they are formed under very specific conditions in very specific places in the earth. In addition to this, creating synthetic diamonds is a harder thing to do because you would need to emulate the conditions it is created in naturally.

Materials that are harder to create (synthetic or not) would be found in lesser numbers. If there is less of something then the price of that object would be higher and it would be worth more, since it is harder to come across that object.

We did. We decided it was rare, pretty, and worth money. We started using gold for trade, and so it became valuable.

Please remember to search before posting. 🙂

What makes them profitable is that companies can make more money selling them than they spend mining and processing them.

If your question is what makes them valuable, well it depends on the metal, different metals are valuable for different reasons. Some are just pretty or have become ingrained in society, and they become jewellery or other luxury items. They could just be popular for no particular reason at all. Some have practical uses in science and technology; they might be really strong and light and thus useful for military use (eg. armour) or in construction, they might be really good at conducting electricity or heat, or really good at resisting it, useful to resist corrosion or bacteria, all sorts of things.

If it costs more to produce it than it’s worth to the consumers, they’ll find an alternative and it won’t be mined anymore.