Seems throughout history gold is seen as a great finite mineral that, in case your country and currency collapses, you can go to another country and start fresh with it, but with globalization, in a serious collapse, gold would be completely useless, you can’t farm with it and you can’t make good weapons with it neither, so why does gold prices rise whenever there is uncertainty, especially a global one? I get that it’s finite, but so is crude oil and it’s not vested the same way.
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Gold has the most stable long term value of any available instrument.
Of all the things you can turn money into, gold is the most likely to be worth more or less the same in 5, 10, 50, or 100 years.
If nothing else gold will always have an amount of desirability as a status symbol due to it looking pretty and not tarnishing. It’s been valued throughout ancient times due to this.
Of course how long between a hypothetical global societal collapse and at the very least feudal chieftains emerging who are interested in such things is debatable.
because the cost of gold stays steady. for example, a shirt costs 50 dollars. in a years time, that shirt will cost 55. but your $50 note is still worth $50, so that $50 note is worth slightly less. this is inflation. if I sold my pound of gold for $50, in a years time that pound of gold is going to be valued at $55. so you sell the gold and buy the shirt. the gold has held its value.
hyper inflation is a good example of this. you got 20,000 in savings, in a couple of months that becomes worthless as a loaf of bread now costs 1,000,000. so you can’t buy anything realistically. but that bar of gold worth 20,000 is now worth 250,000,000,000
When the world’s on fire, people trust gold more than government IOUs. It’s basically the OG ‘In Case of Emergency, Break Glass’ asset
Scarcity and desirability. Unless something completely unforeseen happens (like more gold is discovered which increases the world’s known supply of gold by several times), unlike currencies, gold is never going to lose all its value. Yes, its value is tied to something other than practical uses for it, though there are some uses for which gold is uniquely suited. In an actual apocalyptic type event? Yeah, its probably not really going to have any value. Nor is money. Actual material goods with practical uses would – tools, food, etc.
Gold won’t be useless. It’s a vital metal in medicine and electronics due to its ductile properties and conductivity. Your phone has maybe 10-20mg of gold in it.
Gold has always been a signifier of wealth and power because it’s shiny, and it doesn’t rust. But that’s where the aspect of trust in a system comes from. You can use really anything, but gold was the most significant object that thousands of different civilizations all valued independently.
The value of gold goes up as inflation increases.
Say inflation goes up 10% and you have $1,000 USD. Next year, that $1,000 USD will have the purchasing power of $900.
If you buy gold at $1,000 USD, then next year the value will go up to $1,100. But the purchasing power remains the same.
So it’s a way to maintain your money at the same amount instead of decreasing.
Not to mention, gold is used in a ton of products. So companies would want to buy it before the price increases the next year.
Should precious metal lose their perceived value, we would have problems that could not be solved by “just go to another country and start fresh”, as fiat money would also have lost value and it then follows that somehow barter arrangements would have to have broken down to some ridiculous petty level where no one accepts any placeholders for money.
Even in some post apocalyptic scenario people would hoard gold or value it.
Because most people do not prepare for the end of civilisation. They don’t want to farm, they don’t want weapons, they want their savings secured so in 10 years time when economy has rebounced they can buy a new car with it.
I’m a total societal collapse, like a zombie apocalypse? Nothing.
But we haven’t had one of those. No matter how bad your country’s stability or economy, someone, somewhere, will want to buy precious metals like gold for a pretty hefty rate. Houses can get blown up in a war, property values are tied to the location and economic progress, stocks are volatile with the general economy, bonds and currency are tied to the health of the country, and all of those things could be at 10% or less of their value for 50 years if, say, the USSR collapses when you live in it. But even if your country’s currency collapses in a war that decimates every company’s stock and turns all land into a wasteland, your government collapses and all bonds and currency are rendered void, leading to a global recession in even foreign company’s stocks, after a few years, someone in the world is guaranteed to buy your gold.
You question and the answers are kind of mismatched.
Gold has historically been the best investment… if you assume the economy is going to continue and life as we know it will remain about the same for the foreseeable future.
OP, your question seems to be “why would people buy gold if the world completely collapses and humans go back to basic survival needs?” You are right in that situation, gold would not be worth as much. Tools, shovels, seeds, raw metals like iron and steel, all of those would be more “valuable” than gold.
Having said all that, the odds of the world actually collapsing like you’re asking is very VERY small. There is a far greater chance that we have a period of economic downturn followed by the eventual return to new highs. In which case, gold is your best bet.
In pre-globalization times, you could theoretically take your gold somewhere else. Melt it down, and you got new money.
But…all the gold ever mined is a 22×22 meter cube. The gold you need to move isn’t a LOT. I mean, it’s a lot, but not crazy. Those separate civilizations only prized gold the same because they traded with each other. You couldn’t take your gold to Papua New Guinea in 1400 and get doubloons for doubloons. Or see what the Aztecs would trade you in 1100 (since they stockpiled gold, but didn’t line their streets with it), but they wouldn’t care THAT much if you came to them with the stuff. It got looted the other way, towards Spain.
The exchange isn’t a written exchange rate. They’ll give you what they want to trade, not 8 shillings worth of what you want. Worth is relative.
Humans have liked gold for so long because it doesn’t tarnish, is mostly everywhere, and we like shiny things. Gold keeps its value in modern times because we assume we’ll be able to trade it for about the same thing later on (which fiat currency like the dollar doesn’t have). If shit REALLY goes down, no one wants your shiny rock. We want shiny rocks when we’re not starving and not killing each other.
Gold is a safe haven for money you assume you’ll care about it in a little while.
Gold is seen as having objective value. It’s beautiful, it doesn’t corrode, everyone recognizes it, and there’s a small and finite amount of it (we’ve never found a way to synthesize it). It also does have practical applications. Go see an exhibit of ancient Egyptian artifacts. The stone buildings have crumbled nearly to dust but the gold jewelry worn by royalty looks exactly like the day it was made. Gold is a pretty decent conductor and doesn’t corrode. It’s used in electronics and medicine. If that all sounds too high tech for a collapsed world, consider then its uses in dentistry. Gold crowns for corroded teeth have been around a long time. Because in addition to never corroding, gold is rather a soft metal: suitable for a false tooth.
Psychologically, gold is reassuring. Everyone knows about it. You aren’t going to encounter strange people who have never heard of gold. It’s been prized for millennia – since before recorded history. And even in modern times its value has held fairly steady over time, because nothing can really affect the supply for it.
In a world based on artificial value, like currency, (and ffs crypto-currency now), gold is seen as a constant, something tangible and permanent.
It’s a good long term investment, above all, because people believe it is. And that belief is hard to shake.
>I get that it’s finite, but so is crude oil and it’s not vested the same way.
One of gold’s advantages is that it’s compact. You could carry a million dollars’ worth of gold, or hide it under your bed. Harder to do with a million dollars’ worth of oil.
But yeah, buying gold hasn’t often worked out great as an investment strategy over time – and the “strategy” of fleeing-stocks/moving-to-gold after a big drop is a trap that lots of people have fallen into.
And yeah, in a full-on apocalypse scenario, both gold and cash might retain some value.. but you’d be much better off with durable-food/bullets/equipment and/or a good place to go. But these are not likely scenarios. For more realistic “crisis/event” scenarios, what you want is some normal savings, some cash, and some emergency supplies/food/water on hand to get through a week or two of isolation.
There’s a lot of pretty good answers in this thread already, but it triggered me to share that my BIL recently changed jobs to become a gold broker. He literally goes to a brick and mortar shop and buys and sells gold. He appraises jewelry and gold items, they take them off site and melt them down, and he sells gold bars to people that want to invest in gold market. It’s bizarre to me and I know a lot of people do it, but it’s a world I knew nothing about really until he changed jobs, it seemed like a weird career move at almost 50.
Gold is kind of a universal currency, accepted by all, and desired by all.
Whatever other asset you have, whether it be dollars, euros, stock in a company, yen, oil or bananas, you will find someone who doesn’t accept it as payment. North Koreans might not want your imperialist dollars, and the truck-load of bananas that you own lose their value by the minute.
Gold is highly valued through history because it doesn’t rust like other metals. You can salvage it from a shipwreck, clean the algae off it, and it’s still good. This has led to it getting a status as a stable asset and the most desirable metal to make status symbols out of. Kings and Queens don’t want their regalia to look shabby after a few generations.
When the economy goes into uncertain times, people seek out this asset that will never break or go bankrupt.
People throughout history have crossed their fingers and hoped that the price of gold would not go down in the future.
In general that bet has usually paid out, as long as you’re looking at a long enough time frame.
There’s no “point” other than “it’s been a good bet so far”.