Why is Gold so expensive?

[shellytuhenmay]

The price of gold per ounce seems so massive. I know that gold has amazing properties but it still seems that the price per ounce is extreme. What makes it so valuable compared to other things like iron?

 

[Brains_N_Boobs]

Supply & demand.

 

[shellytuhenmay]

I see. Supply and demand. That makes sense. So if the government banned gold mines would the price of gold go up?

 

[TarnishedPenny]

Its chemical and physical qualities make it very useful for a lot of things, but that’s hardly enough to account for the phenomenon. My personal opinion is that it is valuable because we all agree that it is valuable. That’s been a common opinion/delusion since about forever.

Think of the stock market. What makes one stock very valuable and another a dog? Simple; it’s shared buyer confidence, a mass belief that a share of Apple or Honeywell is in fact worth something. There are of course reasons people believe that, but it all comes down to shared confidence. The market rises and falls in general as investors gain or lose that confidence.

Another factor is that there’s not much out there. If gold was as common as iron or aluminium, it would be worth much less.

 

[freshNyummy]

there is a finite amount of gold on the planet, and most of the "easy" to access gold has been mined. it's a global economy, and the u.s. produces about 6% of the world supply it seems. not clear that what our government does with respect to mining would have much impact on the price of gold. there will always be a limited supply, and it has properties that make it in demand...

 

[dkak001]

The price of gold per ounce seems so massive. I know that gold has amazing properties but it still seems that the price per ounce is extreme. What makes it so valuable compared to other things like iron?

Supply is small. All the gold ever mined (in the history of the world) would make a cube only 66x66x66 ft. A bit bigger than a house or barn, but not too much so.

I've seen piles of iron ore ready for smelting into iron/steel the dwarf that. That's produced on a weekly, if not daily basis. That's at one single mine site.

Add to that the fact that it has those unusual properties, it becomes valuable. Of course Rhodium is more expensive than gold...

On a weight basis many IC chips that are worth more than gold. Some are worth hundreds of thousands of dollars a pound. And that's just simple sand and inexpensive metal that's been processed into something useful. So, gold isn't all that valuable all things considered.

 

[shellytuhenmay]

Supply is small. All the gold ever mined (in the history of the world) would make a cube only 66x66x66 ft. A bit bigger than a house or barn, but not too much so.

I've seen piles of iron ore ready for smelting into iron/steel the dwarf that. That's produced on a weekly, if not daily basis. That's at one single mine site.

Add to that the fact that it has those unusual properties, it becomes valuable. Of course Rhodium is more expensive than gold...

On a weight basis many IC chips that are worth more than gold. Some are worth hundreds of thousands of dollars a pound. And that's just simple sand and inexpensive metal that's been processed into something useful. So, gold isn't all that valuable all things considered.

But it is rare and thus more valuable then things that are abundant. So the price is based on supply and demand... right?

 

[shellytuhenmay]

Its chemical and physical qualities make it very useful for a lot of things, but that’s hardly enough to account for the phenomenon. My personal opinion is that it is valuable because we all agree that it is valuable. That’s been a common opinion/delusion since about forever.

Think of the stock market. What makes one stock very valuable and another a dog? Simple; it’s shared buyer confidence, a mass belief that a share of Apple or Honeywell is in fact worth something. There are of course reasons people believe that, but it all comes down to shared confidence. The market rises and falls in general as investors gain or lose that confidence.

Another factor is that there’s not much out there. If gold was as common as iron or aluminium, it would be worth much less.

So, to some degree like art work? The value is created by people simply believing it is valuable. So if artists were forbidden to make any more art work I wonder if the price of existing art would skyrocket.

 

[lanceGibs]

But it is rare and thus more valuable then things that are abundant. So the price is based on supply and demand... right?

In economics it is said "Gold has the right amount of availability and the right amount of scarcity" to make it so important as an investment.

 

[Goldenfinger]

The price of gold per ounce seems so massive. I know that gold has amazing properties but it still seems that the price per ounce is extreme. What makes it so valuable compared to other things like iron?

some people believe that the price of gold should be higher and that the price has been manipulated. You have to also remember gold was used as money for thousands of years.

View attachment 2186096

 

[FL30]

The price of gold per ounce seems so massive. I know that gold has amazing properties but it still seems that the price per ounce is extreme. What makes it so valuable compared to other things like iron?

the ink that you use in your printer is actually more expensive per ounce than what gold is

some perfumes are, too

But bottom line is that it is always a supply and demand that sets the price of things. The rarer or difficult something is to attain, the more expensive it is.

Just think about cars - Chevy's, Fords, Dodges are cheaper to buy than a Ferreria, or a Lamborghini due to the rarity of those cars versus the wide spread of availability of the Chevy's, Fords, & Dodges.

 

[TarnishedPenny]

So, to some degree like art work? The value is created by people simply believing it is valuable.

But it is rare and thus more valuable then things that are abundant. So the price is based on supply and demand... right?contributes to the supply-and-demand… right?

Gold is scarce and that certainly plays to the supply end of supply and demand. Yet that doesn’t, IMO, explain the demand. Gold has lots of cool chemical and physical properties which make it useful. It’s attractive. But I seriously doubt those by themselves can account for its fascination to our species.

Your analogy with artwork is a good one. The Mona Lisa is in reality just a couple of pounds of paint and canvas on a wood frame; objective value virtually nil, yet simply because people agree that it is valuable, it is priceless. Humanity collectively believes gold is valuable and that belief, IMO, makes it so expensive, far more so than its malleability, chemical stability, etc would justify (only 10% of produced gold is used industrially).