
Why Gold? - kcl
http://kevinlawler.com/gold
======
jofer
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.

~~~
VikingCoder
I feel as though Dave Barry would jump in and point out that you've just
shared an awesome band name:

Felsic Magmas

~~~
genericpseudo
Cummingtonite.

(There is a long tradition, among earth scientists, of geological dirty puns.)

~~~
jofer
We do know how to make the bedrock.

~~~
genericpseudo
My thing was crystallography. We do have the odd characteristic habit.

------
svs
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
>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.

~~~
DanBC
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.

~~~
vox_mollis
This. Also, you can durably plate other metals with gold only tens-to-hundreds
of atoms thick, so actual mass usage is kept very very small for these
applications.

------
mudil
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-g...](https://jameskennedymonash.wordpress.com/2014/07/13/why-is-gold-
yellow-the-chemistry-of-gold/)

[https://www.fourmilab.ch/documents/golden_glow/](https://www.fourmilab.ch/documents/golden_glow/)

~~~
kcl
This is too cool not to try and incorporate.

------
applecore
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)

~~~
allworknoplay
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.

------
magice
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.

~~~
goldbrick
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-
me...](http://www.neatorama.com/2010/11/30/why-gold-is-the-ideal-metal-for-
currency/)

------
alricb
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).

~~~
IkmoIkmo
That's not really true. Gold is used in decoration because it's expensive.
i.e., it's use as a status symbol derives from its costliness primarily, not
the other way around.

Aluminium had a similar status, at one point it was used for decorating the
most fancy things, it was a show of wealth and power and more expensive than
gold or silver. If you had aluminium cutlery, you were the bomb. Then they
were able to produce aluminium cheaply, instead of mine the small amounts that
naturally exist. It became dirt cheap, and thereby lost its status.

Was it any less decorative? No. The cutlery still looked the same. It became
uninteresting to use aluminium not because it became ugly, but because it
became cheap.

Same with gold. Yes we sorta-kinda like shiny things, but we don't like the
gold apple watch the best because we like the tacky golden color so much, we
like it because we all know it's expensive. There are lots of pretty metals,
pretty colours etc, it's not what gives gold its value.

Of course gold isn't useless, it has industrial applications and indeed
artistic applications as you mention. But what is clear as day, is that it
trades at a value that far exceeds this use, at a value that can't be
explained by its functional utility alone.

~~~
dragonwriter
A minor nitpick: aluminum was mined before and after it became cheap, what
made it cheap was improvement in the process of refining the mined ore into
pure aluminum, not that it was suddenly "produced cheaply" instead of "mining
the limited amounts that naturally exist".

~~~
IkmoIkmo
thanks

------
delibes
"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.

~~~
kcl
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.

~~~
philipov
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.

------
KingMob
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.

------
alanwatts
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

------
blacksqr
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.

------
padobson
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
Paper money (fiat currency in particular) gets value because you can pay debts
and taxes with it.

~~~
mamon
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
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.

------
Mikeb85
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.

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

~~~
slantyyz
Canada has eliminated all but 77 ounces of their gold reserves.

[http://www.mining.com/web/and-then-there-was-none-canada-
sel...](http://www.mining.com/web/and-then-there-was-none-canada-sells-its-
gold/)

~~~
kingmanaz
...right before gold shot up ~15%. Bad timing.

------
hasenj
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.

------
pjc50
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
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.

------
whiddershins
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.

------
rrowland
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
Silver tarnishes.

------
meric
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.

------
maaku
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)

------
okfine
[https://www.youtube.com/watch?v=rc0vb5jImuE](https://www.youtube.com/watch?v=rc0vb5jImuE)

------
burritofanatic
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
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.

~~~
clamprecht
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
I think the point of calling people VP, executive etc is explicitly to not do
that. It's meant to sound impressive. :)

~~~
IkmoIkmo
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.

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

