Gold is highly sought after as a commodity for jewelry and investments. The price of gold stood at $2,000 an ounce as of March 2021. This price is still relatively high compared to the past decade. In addition, gold is one of the most precious metals due to its long-lasting value. Here is why gold is valuable for investors and collectors.
What Properties Make Gold Valuable?
Because of three properties, gold retains its universal appeal: durability, malleability, and scarcity.
The unique quality of gold is something that very few precious metals can match. It is resistant to rust and tarnish and can only be corroded in certain conditions. Its strength is one reason why it has held its value through the ages. The proverbial fountain of youth among precious metals, gold has remained attractive and vibrant throughout the centuries.
If gold were abundant in the Earth’s crust, it wouldn’t be as valuable.
The World Gold Council estimates that around 201,296 tones have been extracted from above-ground gold stocks as of February 1, 2021. The council points out that gold is almost indestructible, so most of the metal is still available in some form. “If every ounce of this pure gold were placed side by side, the result would be a cube measuring around 22 meters on each side,” – The World Gold Council. Below-ground reserves are approximately 50,000 tonnes.
Even considering durability and scarcity, gold would not be a valuable metal if it did not possess superior malleability properties. The ability of gold to be shaped is called malleability. It can be shaped with a hammer, or you can use large rollers to achieve the desired thickness.
Gold is malleable, which makes it superior to other metals. The American Museum of Natural History states that gold is more malleable than other metals. A single ounce of gold, roughly the size of a quarter, can be shaped into a continuous sheet of approximately 100 feet. Therefore, to cover the entire area of a football field, it would require 576 ounces or 36 pounds of gold.
Pure gold, which can be easily handled and shaped, is very soft for a metal of its kind. This makes pure gold a popular choice for many purposes, including jewelry making and manufacturing. Unfortunately, pure gold is not strong enough to withstand everyday wear. However, it can be mixed with other alloys to increase its durability and strength.
When did the United States move away from the gold standard?
Gold has been a currency throughout history. However, the idea of owning any gold was not appealing because gold was associated with money. As a result, the United States ended its commitment to the gold standard in 1973. The United States President Gerald Ford lifted a prohibition on gold ownership and transactions in 1974.
You can now buy and sell precious metal bullion and coins directly from jewelry and gold dealers. This is because the Federal Reserve Bank doesn’t buy or sell precious metals. So instead, bullion is made available by dealers through the U.S. Mint.
According to the Federal Reserve Bank of Richmond, no country prohibits private ownership of gold.
Why does gold production influence the value of gold?
The price of gold is affected by the state of global gold production. The U.S. Geological Survey reported in January 2020 Mineral Commodities Summaries that gold mining had not experienced significant changes over the past four years.
The domestic U.S. gold mining output is estimated at 200 tones. This is 11% less than what was produced in 2018, which was estimated at $9 billion.
What impact does gold’s investment demand have on its value?
Exchange-traded funds still have a high demand for gold. As a result, these funds have metal-related shares and can be purchased and sold by investors.
Global investment trends can also impact gold’s value and desirability. The World Gold Council released a statement in a 2019 Gold Demand Trends, Full Year and Quarterly 2019, stating that gold purchases from different investment sources totaled around 1,271.7 tones. In addition, the council’s report says that “low-interest rates and geopolitical uncertainties pushed holdings of gold-backed ETFs up to record highs at 2,905.9 tons during the fourth quarter 2019”, the most recent period for which information is available.
Why does gold offer wealth protection?
Gold has managed to hold its value even through economic losses and gains. As a result, investors gravitate to gold investment despite stock market fluctuations and recessions. Investopedia explains the factors that affect the price of gold, “When the expected or actual return on bonds, equities, and real estate falls, interest in gold investing may increase, driving up its value.” It is also considered to protect in times of political instability.
Investors find gold extremely valuable because it can hold its value regardless of currency devaluation and inflation. In addition, you can see the wealth protection that gold provides to investors worldwide when you consider factors like the global demand for gold, the amount of gold in bank reserves, and the value of U.S. dollars.
Get your gold appraised today!
Now is the perfect time to sell gold, with gold prices still at record highs. Are you unsure what to do about old pieces of gold jewelry that are still in your safe deposit box? AU Precious Metal Solutions will take your unwanted gold. We will pay cash for any gold that you have.
Contact us online or call us to schedule your gold appraisal to receive a no-obligation, free cash offer for your precious gold.