13 ms·

Why Gold?

85 points by kcl 11y ago

delibes 11y ago
"Gold is not useful" Gold is useful. Good thermal conductivity and low chemical reactivity with many corrosive compounds. Using it for money and decoration is perhaps the least sensible thing.
- snowwrestler 11y ago
  Today that's true, but if we go back and look at the origins of gold in human society, the question is really, why did gold become so desirable vs. any other substance ancient humans observed. 1) The low chemical reactivity means it doesn't tarnish or break down. This is a BIG one for jewelry--a gold ring still looks bright and shiny 50 years later, unlike other metals, shells, bone, or pieces of wood, dyes, paint, etc. 2) It's continuously divisible into any amounts. You can easily chop a ring in half and sell half of it, if you only want to barter with a portion of your gold.
- meric 11y ago
  I'm not sure I'd like a coin that has high chemical reactivity. They got that part right.
  - adrianN 11y ago
    Many countries have Aluminium coins, that's a very reactive metal.
    - carlob 11y ago
      But Aluminium is not that reactive once the surface has oxidized.
    - meric 11y ago
      How long have they had them for?
      - adrianN 11y ago
        The 1 Yen coin exists since the fifties.
  - delibes 11y ago
    Meh - we get on fine with paper and plastic money in many places. Or digital. I'm glad I don't have to buy dinner with a big bag of platinum, gold, silver, copper coins etc.
- dsmithatx 11y ago
  While it is useful, I think that wasn't what the author meant. There is actually very tiny amounts of gold used in manufacturing etc. Compared to iron and other metals gold isn't used much is probably more what was meant. Gold is actually mostly used for money, decoration, and collecting which is what drives the price to such high levels. I agree it isn't all that sensible when you try to make sense of it.
- kcl 11y ago
  We all know that gold has industrial uses. But those won't appear for thousands of years. Mentioning that you can use gold in integrated circuits does nothing to explain gold in the Stone Age.
  - delibes 11y ago
    Fair point. So, I look forward to the follow ups :) If it's just the pretty, shiny stuff that makes it valuable, then gold will always have some value (bar nuclear synthesis and Star Trek replicators). If it's scarcity, then there's market manipulation and alternative artificial currency a la Bitcoin.
  - philipov 11y ago
    The fact that gold doesn't corrode explains why it is used for money and decoration. You don't want your decorations to tarnish, and you don't want your currency to degrade over time. When it comes to resisting time, you just can't beat gold.
  - Turing_Machine 11y ago
    Hmm... I think if gold had been cheap enough, the ancients would have used it for some practical purposes. Cooking and drinking vessels that didn't corrode, for instance. Also plating on iron and steel items to keep them from corroding (non-electro gold plating has been known since ancient times). Several others come to mind.
meric 11y ago
Good article. I'd like to nitpick, rich != power, just because you're rich does not mean you can hire people to steal gold violently for you. For that, you need followers. Without followers and having lots of gold just makes you a target.
burritofanatic 11y ago
As a side note, the author's bio is interesting. He went from assistant VP at Merrill Lynch to being a software engineer at Etsy.
- eeks 11y ago
  Assistant VP in a big bank usually means underpaid third-class software dev. Working as a software engineer at Etsy is most likely a promotion.
  - sulam 11y ago
    Yeah, if he'd gone from Managing Director to writing code for Etsy that would be interesting. Bank titles make tech company inflated titles look sedate. "You're a senior engineer your second year out of school? I'm an EVP, dude, why you so bad?"
  - clamprecht 11y ago
    Maybe job titles should somehow indicate the number of others in the company with the same job title. So VP/3500 would mean there are 3500 people with the title "VP" in the company. Not so impressive. I remember once when my dad worked at IBM, he mentioned the president of IBM was only 5 "bosses" up from him. I was really impressed, until he told me that it's not that impressive, because 10,000 other people are also in the same position.
    - jib 11y ago
      I think the point of calling people VP, executive etc is explicitly to not do that. It's meant to sound impressive. :)
      - IkmoIkmo 11y ago
        Absolutely. A lot of sales-heavy companies have thousands of vice presidents, because if you're getting approached by a 'sales employee from XYZ investment bank' you hang up, if you get approached by 'the' (really 'a') vice president of sales from XYZ investment bank, you're more inclined to consider the sale. There's entire industries where you start out of college around age 22, get an entry function for 3 years, a follow-up function for 3 years, and then become vice president by 30, and stay there for life, become a partner or change careers. The amount of VCs is ridiculous and totally lost its meaning.
eggestad 11y ago
Stop using gold as reserve currency and the price of gold plummets >99%
- slantyyz 11y ago
  Canada has eliminated all but 77 ounces of their gold reserves. http://www.mining.com/web/and-then-there-was-none-canada-sells-its-gold/ http://www.mining.com/web/and-then-there-was-none-canada-sel...
  - kingmanaz 11y ago
    ...right before gold shot up ~15%. Bad timing.
jofer 11y ago
Completely off topic, but as a geologist, phrases like this are a bit like nails on a chalkboard: >> "Gold is still rare, but it's also everywhere, roughly speaking. It's geologically distributed like this because it leaves the center of the Earth through volcanoes and other cracks. The Earth's surface has cracks all over it, so gold is all over it." In context, it's innocent enough, but it's the sort of thing that makes me twitch grumble... (The phrase "fault line" provokes the same reaction... It's not a line! Just say "fault".) The main part is that a) gold isn't everywhere. It's concentrated in specific areas. and b) Why add the "center of the earth" part in? That's just silly... Next, most(ish) gold deposits are probably sourced from metamorphic fluids rather than igneous activity. It's true that there is a major category of gold deposits associated with felsic magmas, and another associated with oceanic crust production, but way off base that "gold comes from volcanoes". Next: >> "Coming from the center of the Earth is going to ensure that gold has qualities not usually seen on the surface." What?? Yes, gold is relatively nonreactive and relatively soft. That's because it's a noble metal. It doesn't come from "the center of the earth"... Yes, the core is probably enriched in gold compared to the crust, but the gold we mine at the surface doesn't rise up from the core. (In fact, it was probably added by meteorite bombardment after the planet was formed.) At any rate, enough ranting. Neither of these have any bearing on the topic of the article itself.
- kcl 11y ago
  If you can show that ancient placer deposits were the result of meteor strikes and not volcanic activity I'll change the article. Everything I read pointed to volcanic activity. If you mean modern mining activity, not germane.
  - jofer 11y ago
    Placer deposits are secondary in nature. I was referring to the original source of the gold, not later erosion and deposition. Most major gold deposits are related to orogenic events (mountain building). A significant subset of these are related to fluids associated with felsic magmatism. However, the majority of orogenic gold deposits are linked to fluids that escaped during wide-spread regional metamorhpism, as opposed to volcanic activity. In other words, they're not related to igneous activity, but rather with burial and heating of large regions of rocks. (Note - Metamorphism is not melting.) That aside, my main gripe is with using "center of the earth". Yes, many gold deposits are linked to igneous activity. However, even if it is volcanic, what does that have to do with "the center of the earth"? Volcanoes don't source anything from that deep. Nothing comes from the core. The metorite bombardment I was referring to is an early phase in Earth's history. After the core and mantle segregated, most of the heavy elements should have wound up in the core and been unable to escape. However, we see relatively high concentrations of many heavy elements in the crust and mantle. The leading hypothesis is that the heavy elements were added during the meteorite bombardment phase of the planet's formation. Because the core had already segregated, the heavy elements added this way were able to remain in the mantle and crust. At any rate, sorry to go on a rather technical rant. It distracts from the main point of the article.
alricb 11y ago
Gold isn't useless, it's great for decoration, jewelry and small sculptures. For instance, because it's so malleable, you can easily turn it into a sheet and apply it to a sculpture, as the Greeks did. We don't usually think of decoration as something that's worth a lot of money, but that's partly because we have access to so many cheap organic pigments. Before the 19th century, natural pigments could be very expensive and societies spent a lot of money on them (like the Greeks who painted and gold-plated their statues).
- kcl 11y ago
  Ancient Greece is still an age or two away. I am interested in your pigment argument, however. If I get into specifics about what makes gold good art I'll check into that. It would be interesting to look into, say, the price of gold versus purple dye in Ancient Rome.
  - jolhoeft 11y ago
    The classic example of this is ultramarine blue in the Renaissance. Typically cost three times its weight in gold. Painters often had to have their patrons supply the ultramarine if they wanted blue in their painting. Having a very blue painting was naturally a status symbol.
- tosseraccount 11y ago
  "The things which have the greatest value in use have frequently little or no value in exchange; on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarcely anything; scarcely anything can be had in exchange for it. A diamond, on the contrary, has scarcely any use-value; but a very great quantity of other goods may frequently be had in exchange for it." -Adam Smith , from An Inquiry into the Nature and Causes of the Wealth of Nations
- thaumasiotes 11y ago
  > We don't usually think of decoration as something that's worth a lot of money The fashion and jewelry industries might disagree.
okfine 11y ago
https://www.youtube.com/watch?v=rc0vb5jImuE https://www.youtube.com/watch?v=rc0vb5jImuE
LiweiZ 11y ago
It's a viechle for value. If not gold, there will be other viechles.
pjc50 11y ago
This is written in extremely simplistic language, as if trying to explain to a small child - has it been through the Randall Munroe Thing Explainer filter?
- theandrewbailey 11y ago
  No. Paste it into the Simple Writer, and there are many less simple words used. https://www.xkcd.com/simplewriter/ https://www.xkcd.com/simplewriter/ And yes, I got that vibe, too. It's the same one I got when writing an article about encryption using it.
rrowland 11y ago
Why Gold? Why not Silver? Gold isn't useless, as others have said. Silver's a lot less useless; it's used in so many useful things, and both gold and silver are currently undervalued. I liked the article, although I was hoping to read more about its value as an investment, and how it's survived and thrived through all of our past depressions.
- marxidad 11y ago
  Silver tarnishes.
applecore 11y ago
Not to sound harsh, but are there any historical sources or references for this essay? It's likely another just-so story about gold and the emergence of money from the barter economy. https://en.wikipedia.org/wiki/Just-so_story https://en.wikipedia.org/wiki/Just-so_story
- dnautics 11y ago
  It's probably the case that barter economies only emerge in cultures that have a concept of money, so even this is a just-so story.
- jron 11y ago
  You might enjoy Nick Szabo's work on the subject: http://szabo.best.vwh.net/shell.html http://szabo.best.vwh.net/shell.html
- allworknoplay 11y ago
  It's ridiculous and completely made up. He's treating prehistory like history -- we have absolutely no clue how this stuff evolved. Based on the role of art in history, it's highly likely that people did what they did with gold because religion / witch doctory, not economics. "Rich people" with lots of stuff in the history we know about were rich because of force and threat, not trade. Edited to add: that doesn't mean trade didn't happen, just that people mostly weren't "rich" off of it.
alanwatts 11y ago
Gold has some uses, but the utility value is far less than the monetary value. The reason for this is a sort of religious idolization. >When I was older, I learned what the fighting was about that winter and the next summer. Up on the Madison Fork the Wasichus had found much of the yellow metal that they worship and that makes them crazy, and they wanted to have a road up through our country to the place where the yellow metal was...Our people knew there was yellow metal in little chunks up there; but they did not bother with it, because it was not good for anything. -Black Elk
padobson 11y ago
I liked this: What really drives the demand for gold is the social aspect. The primary driver is that rich people accumulate gold and so are associated with it. This is also why Chanel can charge $3,000 for a purse. It's also why Apple can charge a premium. It's been a part of their marketing strategy from the beginning. From pg 78 of Isaacson's biography of Steve Jobs: The third and equally important principle, awkwardly named, was impute. It emphasized that people form an opinion about a company or product based on the signals it conveys. "People DO judge a book by its cover," he wrote. "We may have the best product, the highest quality, the most useful software, etc.; if we present them in a slipshod manner, they will be perceived as slipshod; if we present them in a creative, professional manner, we will impute the desired qualities." There's a great deal of value in perception of value. If you have enough imagination to see value in pieces of paper with dead Presidents on them, then you've got enough imagination to see value in perception.
- svs 11y ago
  Paper money (fiat currency in particular) gets value because you can pay debts and taxes with it.
  - mamon 11y ago
    No, paper money gets value because your government forces you to use it - not accepting payment in local currency is punished by fine or jail time in the most parts of the world.
    - svs 11y ago
      Correct. You can discharge any financial obligation with the legal tender and the recipient is obliged to accept it. We're saying the same thing.
  - raincom 11y ago
    You are correct. That's the foundation of Modern Monetary Theory.
KingMob 11y ago
Is this article well-researched, or is it mostly speculation? I'm fine with speculation, just I'm surprised it made the front page of HN.
svs 11y ago
Sorry but this theory is completely wrong. Gold has value because it is a currency (medium of exchange) and money (store of value) due to the following properties: a) Indestructible - bury it in your garden for fifty years, still the same. b) Infinitely divisible - use it to buy a goat or the neighbouring kingdom. c) Easy to detect adulteration d) Stable supply (around 2% growth in supply annually since time immemorial) e) No other use - Gold is terrible for most other things (swords, stirrups, axes....) so demand for it is purely for its value as a currency. This is why rich people had a lot of gold - rich people have money and gold is money There is one other very precious thing and that is diamond, basically the same except not divisible. Silver also caught on but not as much as gold. Pretty much every other metal lacked on one or more of the above properties. Bitcoin is exactly the same, except you can send it over the wire. Over the millenia, the properties people have looked for in currency have not changed.
- VT_Drew 11y ago
  >e) No other use - Gold is terrible for most other things Not true, Gold is one of the best conductors of electricity and is used in electronics and wiring.
  - svs 11y ago
    Yes, but not at the time gold rose to prominence as a currency. In those days people needed mostly swords and axes.
  - Symmetry 11y ago
    Right. Gold has lots of practical uses and if it was valued according to them it would be worth at least as much as Bismuth at $25 per kg. But of course gold is $40,000 per kg.
  - DanBC 11y ago
    Gold's not a great conductor. It's used because unlike copper or silver it doesn't tarnish. And because it's shiny so it looks good in adverts.
mudil 11y ago
Kinda off topic, but here's on Einstein's relativistic effects in gold atom, that give gold its glow: "Why is Gold yellow? Special relativity causes length contractions and time dilations in objects that travel at speeds approaching the speed of light. The valence electrons of large atoms such as gold have such high energies that their speeds actually approach the speed of light—and the relativistic effects on those electrons can become quite large. Special relativity changes the energy levels of the 5d orbital in a gold atom so that the energy difference between 5d and 6s orbitals equals the energy of a ‘blue’ photon. Gold thus absorbs blue light when electrons are elevated from the 5d to the 6s orbitals, while other metals do not. These special relativistic changes to the energy levels of atomic orbitals are slightly different for each element. Relativistic contractions on gold’s valence electrons (the 6s subshell) pull the 6s electron very close to the nucleus. Being closer to the nucleus makes the 6s electron less accessible to any potential reactants. Special relativity is not only the reason for gold’s yellow colour but also for its very low reactivity!" https://jameskennedymonash.wordpress.com/2014/07/13/why-is-gold-yellow-the-chemistry-of-gold/ https://jameskennedymonash.wordpress.com/2014/07/13/why-is-g... https://www.fourmilab.ch/documents/golden_glow/ https://www.fourmilab.ch/documents/golden_glow/
- kcl 11y ago
  This is too cool not to try and incorporate.
hasenj 11y ago
This reminds me about signalling theories in animal mating (reminder: we are animals too). For example, the idea about the peacock's tail being a good signal precisely because it serves no other purpose (and in fact can be a burden!). It signals that the individual is so well off, he can afford wasting resources on such a "useless" ornament. According to this story, trading actual goods for a useless ornament would be a strong social signal that you are so rich, you can afford to lose actual resources in exchange for mere ornaments.
maaku 11y ago
A far better history of Gold and its relation to art: https://www.youtube.com/watch?v=grULH297m48 https://www.youtube.com/watch?v=grULH297m48
magice 11y ago
Here is my serious question for Hacker News community: who the upvote this piece of ? I mean, seriously, guys, why, in the name of all that is (even if marginally) correct, did you up vote this piece of fantasy? I frankly don't think this piece of deserve any more attention than the few minutes I spent insulting it, but I think my insults require defense. After all, they are probably less trashy than their target (in this case; note: I am generally against insult; but guys, I can't help myself). Here goes the defense (feel free to ignore it; again, just ignore this whole things to save yourself a few precious minutes): 1. Gold is among the most useful material on earth. It is impervious to any kind of oxidization, as well as soft and easy to work with, plus conducts heat and electricity superbly. This means that even the least developed societies can fashion high quality tools out of it (from bowls to utensils to weapon). The idea that somehow gold is useless (beside decoration) is beyond laughable. 2. Secondly, the idea of rich and poor within a lowly bartering-only society is also laughable (well, this one is slightly less obvious than the uselessness of gold). Wealth implies accumulation, which implies settlement, which implies (relatively) high food production capacity. By then, oops, you are talking about relatively advanced societies. There is one thing I have yet to find: a society with wealth that looks at gold with no more than amusement. So, 1+2 means that a place where rich people only employ gold for decoration is a fantasy by idiots. Again, I am against name-calling, but this is just so.... Sorry, my bad. Anyhow, please save yourself and STOP UPVOTING IDIOCY.
- maratc 11y ago
  > I have yet to find a society with wealth that looks at gold with no more than amusement. The Aztec Empire (and most other New World cultures) knew and used gold, and fits your definition perfectly. They used cacao beans as storage of value. The Spaniards — who threw cacao beans in the water but were ready to kill for the gold — were quite a surprise for them.
- goldbrick 11y ago
  Yes, thank you, this article is trash, to the point where I have to wonder if it isn't some attempt at trolling akin to "the purpose of a ninja is to flip out and kill people". http://www.neatorama.com/2010/11/30/why-gold-is-the-ideal-metal-for-currency/ http://www.neatorama.com/2010/11/30/why-gold-is-the-ideal-me...
Mikeb85 11y ago
Gold is an accident of history. It's valuable because it's shiny, it was one of the first workable metals (gold jewellery dates back at least to Sumerian times), and it required effort to produce (too Marxian?). Also, royalty and nobles had control of most gold because they controlled the means of production. With the connection to wealth and power, it was then used as a medium of exchange because let's face it, shekels of grain are somewhat inconvenient. Golds value persisted because of its durability, history, beauty, but mostly because it was always in demand.
- deleted 11y ago
  [deleted]
whiddershins 11y ago
Already the author is talking about barter and "protomoney" which sets off many alarm bells for me. I encourage anyone interested in the topic of the origins of money to read "Debt the First 5,000 Years" by David Graeber. AFAICT there is wide consensus among anthropologists that forms of "money" existed far in human prehistory, and barter was never common in early cultures.
blacksqr 11y ago
The success of Bitcoin has led me to think that perhaps its concept of value is not wholly new, but rather illuminates how money has worked all along. All my life, explanations of why gold is valuable have all boiled down to more intellectually nuanced versions of "Ooh, Shiny." But I suggest that gold is agreed to have value because of two traits it has which can be seen as analogous to traits of Bitcoin. First, worked gold items like coins and jewelry represent a certain measurable and comprehensible amount of work. Not too much and not too little, in terms of available labor resources. Second (as I learned from the TV show Connections), the purity of a nugget of gold can be quickly estimated to a high confidence level by rubbing it on the smooth surface of a black basalt river rock. The deepness of the yellow of the streak on the rock immediately shows the quality of the sample. So I believe gold is agreed to have value because to our ancestors gold artefacts demonstrated a certain amount of work invested, and the quality of those artefacts could be quickly evaluated with an efficient "proof of work" algorithm. Why does "proof of work"=value in the Bitcoin ecosystem? In part because it guarantees a cap on inflation (thus preserving value while allowing appreciation), in part because dedicating valuable resources to mining represents a vote of confidence in the system. I believe the simplest explanation for why gold has value is that there is nothing new under the sun, and analogous reasons applied when gold first came into use in human trading systems.

85 points by kcl 11y ago

"Gold is not useful" Gold is useful. Good thermal conductivity and low chemical reactivity with many corrosive compounds. Using it for money and decoration is perhaps the least sensible thing.

snowwrestler 11y ago
Today that's true, but if we go back and look at the origins of gold in human society, the question is really, why did gold become so desirable vs. any other substance ancient humans observed. 1) The low chemical reactivity means it doesn't tarnish or break down. This is a BIG one for jewelry--a gold ring still looks bright and shiny 50 years later, unlike other metals, shells, bone, or pieces of wood, dyes, paint, etc. 2) It's continuously divisible into any amounts. You can easily chop a ring in half and sell half of it, if you only want to barter with a portion of your gold.
meric 11y ago
I'm not sure I'd like a coin that has high chemical reactivity. They got that part right.
- adrianN 11y ago
  Many countries have Aluminium coins, that's a very reactive metal.
  - carlob 11y ago
    But Aluminium is not that reactive once the surface has oxidized.
  - meric 11y ago
    How long have they had them for?
    - adrianN 11y ago
      The 1 Yen coin exists since the fifties.
- delibes 11y ago
  Meh - we get on fine with paper and plastic money in many places. Or digital. I'm glad I don't have to buy dinner with a big bag of platinum, gold, silver, copper coins etc.
dsmithatx 11y ago
While it is useful, I think that wasn't what the author meant. There is actually very tiny amounts of gold used in manufacturing etc. Compared to iron and other metals gold isn't used much is probably more what was meant. Gold is actually mostly used for money, decoration, and collecting which is what drives the price to such high levels. I agree it isn't all that sensible when you try to make sense of it.
kcl 11y ago
We all know that gold has industrial uses. But those won't appear for thousands of years. Mentioning that you can use gold in integrated circuits does nothing to explain gold in the Stone Age.
- delibes 11y ago
  Fair point. So, I look forward to the follow ups :) If it's just the pretty, shiny stuff that makes it valuable, then gold will always have some value (bar nuclear synthesis and Star Trek replicators). If it's scarcity, then there's market manipulation and alternative artificial currency a la Bitcoin.
- philipov 11y ago
  The fact that gold doesn't corrode explains why it is used for money and decoration. You don't want your decorations to tarnish, and you don't want your currency to degrade over time. When it comes to resisting time, you just can't beat gold.
- Turing_Machine 11y ago
  Hmm... I think if gold had been cheap enough, the ancients would have used it for some practical purposes. Cooking and drinking vessels that didn't corrode, for instance. Also plating on iron and steel items to keep them from corroding (non-electro gold plating has been known since ancient times). Several others come to mind.

meric 11y ago

Good article. I'd like to nitpick, rich != power, just because you're rich does not mean you can hire people to steal gold violently for you. For that, you need followers. Without followers and having lots of gold just makes you a target.

burritofanatic 11y ago

As a side note, the author's bio is interesting. He went from assistant VP at Merrill Lynch to being a software engineer at Etsy.

eeks 11y ago
Assistant VP in a big bank usually means underpaid third-class software dev. Working as a software engineer at Etsy is most likely a promotion.
- sulam 11y ago
  Yeah, if he'd gone from Managing Director to writing code for Etsy that would be interesting. Bank titles make tech company inflated titles look sedate. "You're a senior engineer your second year out of school? I'm an EVP, dude, why you so bad?"
- clamprecht 11y ago
  Maybe job titles should somehow indicate the number of others in the company with the same job title. So VP/3500 would mean there are 3500 people with the title "VP" in the company. Not so impressive. I remember once when my dad worked at IBM, he mentioned the president of IBM was only 5 "bosses" up from him. I was really impressed, until he told me that it's not that impressive, because 10,000 other people are also in the same position.
  - jib 11y ago
    I think the point of calling people VP, executive etc is explicitly to not do that. It's meant to sound impressive. :)
    - IkmoIkmo 11y ago
      Absolutely. A lot of sales-heavy companies have thousands of vice presidents, because if you're getting approached by a 'sales employee from XYZ investment bank' you hang up, if you get approached by 'the' (really 'a') vice president of sales from XYZ investment bank, you're more inclined to consider the sale. There's entire industries where you start out of college around age 22, get an entry function for 3 years, a follow-up function for 3 years, and then become vice president by 30, and stay there for life, become a partner or change careers. The amount of VCs is ridiculous and totally lost its meaning.

eggestad 11y ago

Stop using gold as reserve currency and the price of gold plummets >99%

slantyyz 11y ago
Canada has eliminated all but 77 ounces of their gold reserves. http://www.mining.com/web/and-then-there-was-none-canada-sells-its-gold/ http://www.mining.com/web/and-then-there-was-none-canada-sel...
- kingmanaz 11y ago
  ...right before gold shot up ~15%. Bad timing.

jofer 11y ago

Completely off topic, but as a geologist, phrases like this are a bit like nails on a chalkboard: >> "Gold is still rare, but it's also everywhere, roughly speaking. It's geologically distributed like this because it leaves the center of the Earth through volcanoes and other cracks. The Earth's surface has cracks all over it, so gold is all over it." In context, it's innocent enough, but it's the sort of thing that makes me twitch grumble... (The phrase "fault line" provokes the same reaction... It's not a line! Just say "fault".) The main part is that a) gold isn't everywhere. It's concentrated in specific areas. and b) Why add the "center of the earth" part in? That's just silly... Next, most(ish) gold deposits are probably sourced from metamorphic fluids rather than igneous activity. It's true that there is a major category of gold deposits associated with felsic magmas, and another associated with oceanic crust production, but way off base that "gold comes from volcanoes". Next: >> "Coming from the center of the Earth is going to ensure that gold has qualities not usually seen on the surface." What?? Yes, gold is relatively nonreactive and relatively soft. That's because it's a noble metal. It doesn't come from "the center of the earth"... Yes, the core is probably enriched in gold compared to the crust, but the gold we mine at the surface doesn't rise up from the core. (In fact, it was probably added by meteorite bombardment after the planet was formed.) At any rate, enough ranting. Neither of these have any bearing on the topic of the article itself.

kcl 11y ago
If you can show that ancient placer deposits were the result of meteor strikes and not volcanic activity I'll change the article. Everything I read pointed to volcanic activity. If you mean modern mining activity, not germane.
- jofer 11y ago
  Placer deposits are secondary in nature. I was referring to the original source of the gold, not later erosion and deposition. Most major gold deposits are related to orogenic events (mountain building). A significant subset of these are related to fluids associated with felsic magmatism. However, the majority of orogenic gold deposits are linked to fluids that escaped during wide-spread regional metamorhpism, as opposed to volcanic activity. In other words, they're not related to igneous activity, but rather with burial and heating of large regions of rocks. (Note - Metamorphism is not melting.) That aside, my main gripe is with using "center of the earth". Yes, many gold deposits are linked to igneous activity. However, even if it is volcanic, what does that have to do with "the center of the earth"? Volcanoes don't source anything from that deep. Nothing comes from the core. The metorite bombardment I was referring to is an early phase in Earth's history. After the core and mantle segregated, most of the heavy elements should have wound up in the core and been unable to escape. However, we see relatively high concentrations of many heavy elements in the crust and mantle. The leading hypothesis is that the heavy elements were added during the meteorite bombardment phase of the planet's formation. Because the core had already segregated, the heavy elements added this way were able to remain in the mantle and crust. At any rate, sorry to go on a rather technical rant. It distracts from the main point of the article.

alricb 11y ago

Gold isn't useless, it's great for decoration, jewelry and small sculptures. For instance, because it's so malleable, you can easily turn it into a sheet and apply it to a sculpture, as the Greeks did. We don't usually think of decoration as something that's worth a lot of money, but that's partly because we have access to so many cheap organic pigments. Before the 19th century, natural pigments could be very expensive and societies spent a lot of money on them (like the Greeks who painted and gold-plated their statues).

kcl 11y ago
Ancient Greece is still an age or two away. I am interested in your pigment argument, however. If I get into specifics about what makes gold good art I'll check into that. It would be interesting to look into, say, the price of gold versus purple dye in Ancient Rome.
- jolhoeft 11y ago
  The classic example of this is ultramarine blue in the Renaissance. Typically cost three times its weight in gold. Painters often had to have their patrons supply the ultramarine if they wanted blue in their painting. Having a very blue painting was naturally a status symbol.
tosseraccount 11y ago
"The things which have the greatest value in use have frequently little or no value in exchange; on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarcely anything; scarcely anything can be had in exchange for it. A diamond, on the contrary, has scarcely any use-value; but a very great quantity of other goods may frequently be had in exchange for it." -Adam Smith , from An Inquiry into the Nature and Causes of the Wealth of Nations
thaumasiotes 11y ago
> We don't usually think of decoration as something that's worth a lot of money The fashion and jewelry industries might disagree.

okfine 11y ago

https://www.youtube.com/watch?v=rc0vb5jImuE https://www.youtube.com/watch?v=rc0vb5jImuE

LiweiZ 11y ago

It's a viechle for value. If not gold, there will be other viechles.

pjc50 11y ago

This is written in extremely simplistic language, as if trying to explain to a small child - has it been through the Randall Munroe Thing Explainer filter?

theandrewbailey 11y ago
No. Paste it into the Simple Writer, and there are many less simple words used. https://www.xkcd.com/simplewriter/ https://www.xkcd.com/simplewriter/ And yes, I got that vibe, too. It's the same one I got when writing an article about encryption using it.

rrowland 11y ago

Why Gold? Why not Silver? Gold isn't useless, as others have said. Silver's a lot less useless; it's used in so many useful things, and both gold and silver are currently undervalued. I liked the article, although I was hoping to read more about its value as an investment, and how it's survived and thrived through all of our past depressions.

marxidad 11y ago
Silver tarnishes.

applecore 11y ago

Not to sound harsh, but are there any historical sources or references for this essay? It's likely another just-so story about gold and the emergence of money from the barter economy. https://en.wikipedia.org/wiki/Just-so_story https://en.wikipedia.org/wiki/Just-so_story

dnautics 11y ago
It's probably the case that barter economies only emerge in cultures that have a concept of money, so even this is a just-so story.
jron 11y ago
You might enjoy Nick Szabo's work on the subject: http://szabo.best.vwh.net/shell.html http://szabo.best.vwh.net/shell.html
allworknoplay 11y ago
It's ridiculous and completely made up. He's treating prehistory like history -- we have absolutely no clue how this stuff evolved. Based on the role of art in history, it's highly likely that people did what they did with gold because religion / witch doctory, not economics. "Rich people" with lots of stuff in the history we know about were rich because of force and threat, not trade. Edited to add: that doesn't mean trade didn't happen, just that people mostly weren't "rich" off of it.

alanwatts 11y ago

Gold has some uses, but the utility value is far less than the monetary value. The reason for this is a sort of religious idolization. >When I was older, I learned what the fighting was about that winter and the next summer. Up on the Madison Fork the Wasichus had found much of the yellow metal that they worship and that makes them crazy, and they wanted to have a road up through our country to the place where the yellow metal was...Our people knew there was yellow metal in little chunks up there; but they did not bother with it, because it was not good for anything. -Black Elk

padobson 11y ago

I liked this: What really drives the demand for gold is the social aspect. The primary driver is that rich people accumulate gold and so are associated with it. This is also why Chanel can charge $3,000 for a purse. It's also why Apple can charge a premium. It's been a part of their marketing strategy from the beginning. From pg 78 of Isaacson's biography of Steve Jobs: The third and equally important principle, awkwardly named, was impute. It emphasized that people form an opinion about a company or product based on the signals it conveys. "People DO judge a book by its cover," he wrote. "We may have the best product, the highest quality, the most useful software, etc.; if we present them in a slipshod manner, they will be perceived as slipshod; if we present them in a creative, professional manner, we will impute the desired qualities." There's a great deal of value in perception of value. If you have enough imagination to see value in pieces of paper with dead Presidents on them, then you've got enough imagination to see value in perception.

svs 11y ago
Paper money (fiat currency in particular) gets value because you can pay debts and taxes with it.
- mamon 11y ago
  No, paper money gets value because your government forces you to use it - not accepting payment in local currency is punished by fine or jail time in the most parts of the world.
  - svs 11y ago
    Correct. You can discharge any financial obligation with the legal tender and the recipient is obliged to accept it. We're saying the same thing.
- raincom 11y ago
  You are correct. That's the foundation of Modern Monetary Theory.

KingMob 11y ago

Is this article well-researched, or is it mostly speculation? I'm fine with speculation, just I'm surprised it made the front page of HN.

svs 11y ago

Sorry but this theory is completely wrong. Gold has value because it is a currency (medium of exchange) and money (store of value) due to the following properties: a) Indestructible - bury it in your garden for fifty years, still the same. b) Infinitely divisible - use it to buy a goat or the neighbouring kingdom. c) Easy to detect adulteration d) Stable supply (around 2% growth in supply annually since time immemorial) e) No other use - Gold is terrible for most other things (swords, stirrups, axes....) so demand for it is purely for its value as a currency. This is why rich people had a lot of gold - rich people have money and gold is money There is one other very precious thing and that is diamond, basically the same except not divisible. Silver also caught on but not as much as gold. Pretty much every other metal lacked on one or more of the above properties. Bitcoin is exactly the same, except you can send it over the wire. Over the millenia, the properties people have looked for in currency have not changed.

VT_Drew 11y ago
>e) No other use - Gold is terrible for most other things Not true, Gold is one of the best conductors of electricity and is used in electronics and wiring.
- svs 11y ago
  Yes, but not at the time gold rose to prominence as a currency. In those days people needed mostly swords and axes.
- Symmetry 11y ago
  Right. Gold has lots of practical uses and if it was valued according to them it would be worth at least as much as Bismuth at $25 per kg. But of course gold is $40,000 per kg.
- DanBC 11y ago
  Gold's not a great conductor. It's used because unlike copper or silver it doesn't tarnish. And because it's shiny so it looks good in adverts.

mudil 11y ago

Kinda off topic, but here's on Einstein's relativistic effects in gold atom, that give gold its glow: "Why is Gold yellow? Special relativity causes length contractions and time dilations in objects that travel at speeds approaching the speed of light. The valence electrons of large atoms such as gold have such high energies that their speeds actually approach the speed of light—and the relativistic effects on those electrons can become quite large. Special relativity changes the energy levels of the 5d orbital in a gold atom so that the energy difference between 5d and 6s orbitals equals the energy of a ‘blue’ photon. Gold thus absorbs blue light when electrons are elevated from the 5d to the 6s orbitals, while other metals do not. These special relativistic changes to the energy levels of atomic orbitals are slightly different for each element. Relativistic contractions on gold’s valence electrons (the 6s subshell) pull the 6s electron very close to the nucleus. Being closer to the nucleus makes the 6s electron less accessible to any potential reactants. Special relativity is not only the reason for gold’s yellow colour but also for its very low reactivity!" https://jameskennedymonash.wordpress.com/2014/07/13/why-is-gold-yellow-the-chemistry-of-gold/ https://jameskennedymonash.wordpress.com/2014/07/13/why-is-g... https://www.fourmilab.ch/documents/golden_glow/ https://www.fourmilab.ch/documents/golden_glow/

kcl 11y ago
This is too cool not to try and incorporate.

hasenj 11y ago

This reminds me about signalling theories in animal mating (reminder: we are animals too). For example, the idea about the peacock's tail being a good signal precisely because it serves no other purpose (and in fact can be a burden!). It signals that the individual is so well off, he can afford wasting resources on such a "useless" ornament. According to this story, trading actual goods for a useless ornament would be a strong social signal that you are so rich, you can afford to lose actual resources in exchange for mere ornaments.

maaku 11y ago

A far better history of Gold and its relation to art: https://www.youtube.com/watch?v=grULH297m48 https://www.youtube.com/watch?v=grULH297m48

magice 11y ago

Here is my serious question for Hacker News community: who the upvote this piece of ? I mean, seriously, guys, why, in the name of all that is (even if marginally) correct, did you up vote this piece of fantasy? I frankly don't think this piece of deserve any more attention than the few minutes I spent insulting it, but I think my insults require defense. After all, they are probably less trashy than their target (in this case; note: I am generally against insult; but guys, I can't help myself). Here goes the defense (feel free to ignore it; again, just ignore this whole things to save yourself a few precious minutes): 1. Gold is among the most useful material on earth. It is impervious to any kind of oxidization, as well as soft and easy to work with, plus conducts heat and electricity superbly. This means that even the least developed societies can fashion high quality tools out of it (from bowls to utensils to weapon). The idea that somehow gold is useless (beside decoration) is beyond laughable. 2. Secondly, the idea of rich and poor within a lowly bartering-only society is also laughable (well, this one is slightly less obvious than the uselessness of gold). Wealth implies accumulation, which implies settlement, which implies (relatively) high food production capacity. By then, oops, you are talking about relatively advanced societies. There is one thing I have yet to find: a society with wealth that looks at gold with no more than amusement. So, 1+2 means that a place where rich people only employ gold for decoration is a fantasy by idiots. Again, I am against name-calling, but this is just so.... Sorry, my bad. Anyhow, please save yourself and STOP UPVOTING IDIOCY.

maratc 11y ago
> I have yet to find a society with wealth that looks at gold with no more than amusement. The Aztec Empire (and most other New World cultures) knew and used gold, and fits your definition perfectly. They used cacao beans as storage of value. The Spaniards — who threw cacao beans in the water but were ready to kill for the gold — were quite a surprise for them.
goldbrick 11y ago
Yes, thank you, this article is trash, to the point where I have to wonder if it isn't some attempt at trolling akin to "the purpose of a ninja is to flip out and kill people". http://www.neatorama.com/2010/11/30/why-gold-is-the-ideal-metal-for-currency/ http://www.neatorama.com/2010/11/30/why-gold-is-the-ideal-me...

Mikeb85 11y ago

Gold is an accident of history. It's valuable because it's shiny, it was one of the first workable metals (gold jewellery dates back at least to Sumerian times), and it required effort to produce (too Marxian?). Also, royalty and nobles had control of most gold because they controlled the means of production. With the connection to wealth and power, it was then used as a medium of exchange because let's face it, shekels of grain are somewhat inconvenient. Golds value persisted because of its durability, history, beauty, but mostly because it was always in demand.

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whiddershins 11y ago

Already the author is talking about barter and "protomoney" which sets off many alarm bells for me. I encourage anyone interested in the topic of the origins of money to read "Debt the First 5,000 Years" by David Graeber. AFAICT there is wide consensus among anthropologists that forms of "money" existed far in human prehistory, and barter was never common in early cultures.

blacksqr 11y ago

The success of Bitcoin has led me to think that perhaps its concept of value is not wholly new, but rather illuminates how money has worked all along. All my life, explanations of why gold is valuable have all boiled down to more intellectually nuanced versions of "Ooh, Shiny." But I suggest that gold is agreed to have value because of two traits it has which can be seen as analogous to traits of Bitcoin. First, worked gold items like coins and jewelry represent a certain measurable and comprehensible amount of work. Not too much and not too little, in terms of available labor resources. Second (as I learned from the TV show Connections), the purity of a nugget of gold can be quickly estimated to a high confidence level by rubbing it on the smooth surface of a black basalt river rock. The deepness of the yellow of the streak on the rock immediately shows the quality of the sample. So I believe gold is agreed to have value because to our ancestors gold artefacts demonstrated a certain amount of work invested, and the quality of those artefacts could be quickly evaluated with an efficient "proof of work" algorithm. Why does "proof of work"=value in the Bitcoin ecosystem? In part because it guarantees a cap on inflation (thus preserving value while allowing appreciation), in part because dedicating valuable resources to mining represents a vote of confidence in the system. I believe the simplest explanation for why gold has value is that there is nothing new under the sun, and analogous reasons applied when gold first came into use in human trading systems.