The Allure of Gold

"And when they were come into the house, they saw the young child with Mary his mother, and fell down, and worshipped him: and when they had opened their treasures, they presented unto him gifts; gold, and frankincense and myrrh" - Matthew 2:11 KJV

With financially unstable times, some investors put their money in gold. But why gold, what makes gold so special? NPR Money Planet asked Sanat Kumar, a chemical engineer at Columbia University, to examine the 118 elements in the Periodic Table to find which ones could be used as money.

The orange column on the far right is all gasses - so cross that off.

The light orange elements on the far left are very reactive and can burn or explode. Sanat crossed out another 38 elements as too reactive for safe keeping.

The two rows on the bottom of the chart are radioactive; cross them off.

These three rules: Not a gas, Doesn't corrode or burn, and Doesn't kill you, reduces the list of usable elements from 118 to just 30.

Some of the 30, like carbon, are just too common to be "valuable". Imagine a currency that anyone can make from wood!  And a few of the 30 are just too rare  - for example osmium comes mostly from meteorites.

Eliminate the too common and extremely rare and you are left with five "precious metals", rhodium, palladium, silver, platinum and gold. Silver is popular and used as a currency but it tarnishes; it is mildly reactive with air. I'm not that familiar with rhodium or palladium and apparently few are, they were not discovered until the early 1800s due to their rarity. They belong to the platinum group of metals. One quarter of all goods manufactured today either contain platinum group metals or the platinum group metals play a key role during their manufacturing process.

That leaves platinum and gold as safe, non-reactive metals, both of which can be found in rivers and streams in limited but not super rare quantities. Gold was preferred because it melts at a lower temperature (just under 2000 degrees Fahrenheit) and could be fashioned into art and coinage by pre-industrial people. Gold artifacts in the Balkans appear from the 4th millennium BC.

The melting point for platinum is over 3,000 degrees Fahrenheit.

Sanat says,  "For the earth, ... gold is the sweet spot. It would come out no other way."

According to Wikipedia, "Gold has been widely used throughout the world as a vehicle for monetary exchange ... [but] pure gold is too soft for day-to-day monetary use and is typically hardened by alloying with copper, silver or other base metals. The gold content of alloys is measured in carats (k). Pure gold is designated as 24k. English gold coins intended for circulation from 1526 into the 1930s were typically a standard 22k alloy called crown gold."

Modern bullion coins used for investment are frequently pure gold. The popular Canadian Gold Maple Leaf coin has a purity of 99.99%.

Bottom Line

How rare is Gold? We see it everywhere as gold leaf, gold wire connections in computer chips, gold fillings, etc. There is an estimated 158,000 British tonnes of gold that has been excavated globally. This sounds like a lot but gold is very heavy,  a cubic meter of gold would weigh 19.3 tonnes. All the gold in the world would fit inside a cube 20.15 meters, or 66 feet 1.3 inches on each edge. Consider that the Washington Monument measures 55 feet by 55 feet at its base and is 555 feet tall (17 x 17 x 170 m). If you wanted to rebuild the Washington Monument in solid gold, all the gold known to man would only reach 1/3 the height of the monument.

Platinum is slightly more rare. All of the platinum in the entire world would easily fit inside the average home.