Why gold?

December 27, 2006 12:32 AM

Gold. I'm looking for an interesting read, preferably something short, that explains why gold has the role it has in the global economy and how that role came about.

Where did its underlying value come from, other the nearly universal and seemingly tacit agreement that the stuff has value? When did it emerge as valuable? An article or engaging book would great.

posted by aaronwsj to law & government (12 comments total)

Gold Standard - wikipedia.
posted by bigmusic at 12:39 AM on December 27, 2006

Captial Vol. I , by Karl Marx (Ben Fowkes translation).
posted by slow, man at 12:58 AM on December 27, 2006

Value is based on rarity. As I understand it, gold was pretty damn rare in Europe and much of Asia for a very long time, thus making it valuable (see also pepper, for example, which IIRC was once used to pay a king's ransom somewhere in Europe).
posted by dirtynumbangelboy at 4:30 AM on December 27, 2006

Gold is:
1. Hard to get
2. Easily malleable, at low temperatures
3. Doesn't tarnish
4. Doesn't react much with anything
5. Looks nice
6. Bright and shiny
7. Very dense, so a large quantity of it takes up a small amount of space
posted by b1tr0t at 4:37 AM on December 27, 2006

If you want an interesting series of related tangents, in the initial episode of Connections, James Burke explains how our dependence on technology starts with (or more precisely and be traced back to) the touchstone, which was used to determine the purity of gold.
posted by plinth at 6:01 AM on December 27, 2006

The Power of Gold: The History of an Obsession by Peter Bernstein?
posted by paduasoy at 7:37 AM on December 27, 2006

One of the main reasons (I think) is that gold was the densest known metal, and it was more rare then any other. Since gold weighed more then lead (or anything else), if you adulterated gold, it would be lighter then it should be.
posted by delmoi at 7:53 AM on December 27, 2006

What's Wrong With Gold?
posted by serazin at 10:08 AM on December 27, 2006

In other words the inherent property of the medium acted as the best security available. Great properties for a currency:

- Easily divisible
- Easily transportable
- Near impossible to fake
- Easily recognizable

What makes it so good for a simple currency in a simple economy hinders it in more dynamic economies. You can't increase the money supply except through mining. It really isn't that transportable when large projects are considered. Nearly impossible to pull back the money supply.
posted by geoff. at 10:54 AM on December 27, 2006

The Time Life Science Library had this to say about gold:

"Man's lust for gold has been a delusion, for he has pursued little more than a yellow gleam."

Nowadays gold is used in electronic contacts that need not to tarnish, and injections of gold chloride are a treatment for rheumatoid arthritis (although they're all but obsolete, newer treatments have supplanted it.)

Geoff and bitrot covered all the salient points. In particular, the only thing that would dissolve gold was a fuming mixture of nitric and hydrochloric acid that the alchemists called 'aqua regia'; this was a handy way of identifying it in olden days, as most lesser metals would succumb to the properties of straight sulfuric acid or either nitric or hydrochloric acid alone.
posted by ikkyu2 at 3:15 PM on December 27, 2006

Why the gold standard is an economic myth. By Paul Krugman
posted by HotPatatta at 3:46 PM on December 27, 2006

I recommend Gold, by my long deceased grandfather, who specialised in the history of mining in South Africa.
posted by roofus at 3:15 AM on December 28, 2006