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Why Is Gold So Expensive? (Video)

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Via Peter Schiff

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Gold is the “shining embodiment of wealth.”  It is not only used to add “extra bling” to our lives; it is also an important component in expensive high-tech electronics and medical devices. Even more fundamentally, gold is money.

But why is gold so expensive — even more valuable than other rarer metals? A video put together by Business Insider offers some perspective. Simply put, it’s a matter of supply and demand. People want gold and there isn’t very much of it.

Gold is a relatively rare metal. Its unique properties give it its value. It is highly malleable meaning it can be deformed and reshaped without fracturing the material.  It can also be melted over and over again without damaging its fundamental structure. But perhaps the thing that really sets gold apart from other metals is its bright yellow appearance.

Simply put, gold is beautiful.

Alistair Hewitt from the World Gold Council said its beauty makes gold “the embodiment of love and emotion.” That’s why we give each other gold wedding rings.

If you’re an investor, gold’s an excellent portfolio diversification tool. People like to know that they have an element of their wealth which they can feel. Often it looks beautiful, it’s got a wonderful design on it and that adds a degree of emotion to the investment.”

But gold is not merely pretty. It has a great deal of utility.

It’s a perfect material for conducting electricity. And it doesn’t corrode and it doesn’t rust. So, it’s great to have in your product.”

Gold has been valued for centuries, going back to ancient civilizations. Despite the fact that people have been digging gold out of the ground for thousands of years, the process hasn’t changed much. Getting gold is still a difficult process, despite advances in technology that have made mining less labor-intensive.

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It can take up to a decade for scientists and engineers to examine a gold mine site and determine if it will yield enough of the metal to make it viable. And even then, the likelihood of a site becoming a productive mine is less than 0.1%.

But above ground, gold is everywhere: on our fingers, around our necks and even in our mouths. Gold is used in medicine, architecture and almost every electronic component.”

Given the ubiquity of gold, it will probably surprise you to know how little gold actually exists. If you melted down the stocks of above-ground gold totaling about 190,000 tons, it would create a 72-foot cube. And if you divided that between every person on earth, we would each only get about 1 ounce of gold.

New deposits of gold are becoming increasingly hard to locate. Scientists estimate about 55,000 tons of gold remains in the earth’s crust. (Note: the video misstates this number.)

So, as gold mining continues to slow, and the costs associated with mining increase to meet the challenge of extraction, gold could become even more expensive.”

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