Gold Is Money: It’s Elemental!
Gold is money. That’s one of the main reasons you want to own gold.
Gold possesses all of the characteristics of money Aristotle listed 2,000 years ago. The philosopher said sound money must be durable, portable, divisible, and have intrinsic value. You can check off all four of these characteristics for gold. You can also add a fifth characteristic to Aristotle’s list. Sound money cannot be easily manipulated by central bankers – i.e. created out of thin air. That’s why the yellow metal has held its value over time while fiat currencies have fallen in value.
But a chemistry professor at University College London said there is an even more elemental reason gold is money.
Gold is boring. Chemically speaking that is.
In a 2013 BBC article, Andrea Sella argued that its chemical makeup makes gold the perfect element to function as money. It is stable. It doesn’t react with other elements. It doesn’t break down over time.
In fact, gold was chemically destined to be money.
Sella points out that you can eliminate large swaths of the periodic table right off the bat. Take the gases for instance.
A gas is never going to be much good as a currency. It isn’t really going to be practical to carry around little phials of gas is it? And then there’s the fact that they are colorless. How on earth would you know what it is?”
Then you have the room temperature liquids – mercury and bromine. They will poison you. You can mark a number of other elements off the list for the same reason. You can’t have money that kills you.
Moving on, we can rule out the alkaline metals on the left side of the periodic table. They are too reactive.
Many people will remember from school dropping sodium or potassium into a dish of water. It fizzes around and goes pop – an explosive currency just isn’t a good idea.”
And of course, we have a whole swath of radioactive elements. Those are out as well.
There does exist a category known as the rare-earth metals. These are misnamed because many of them are actually more common than gold. They are also difficult to distinguish from each other.
This leaves us with the “transition” and “post-transition” metals. These include iron, aluminium, copper, lead, silver, and gold. But most of these have problems of their own. It takes extreme temperatures to smelt titanium and zirconium. Iron is too plentiful. Aluminum is too flimsy for coinage. Copper and many of the other metals in this category tend to corrode. As Sella points out, “A self debasing currency is clearly not a good idea.”
So, out of 118 elements, we have whittled the list down to just eight candidates to serve as money — the so-called noble metals: platinum, palladium, rhodium, iridium, osmium, ruthenium, gold, and silver. They are all very stable and quite rare. In fact, most of the metals on this list are too rare.
Of the two, gold gets the slight advantage, as Frank Holmes explains in a Forbes article.
What gives gold the edge over silver, however, is—once again—its chemical inertness. Unlike its white cousin, gold doesn’t tarnish. It’s nonreactive to air and water. Add to this its softness, and it easily emerges as the perfect currency. Ancient peoples recognized this, and I don’t think anyone now would have any problem coming to the same conclusion either.”
Sella offers one more reason humans have valued gold for millennia.
Gold is unbelievably beautiful.”
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