Article is a brief review of the book "The Secret History of Gold" by Dominic Frisby.
EDIT: Aluminum itself may not be the best counterexample to gold as it was not discovered until the industrial revolution was well underway.
It is rare, inert, malleable, has a low melting point and has a distinct unique colour.
All of these are quite useful for being a store of value:
- inert: gold from 10000 years ago is basically exactly the same
- malleable: it is easy to subdivide for coinage (compare with diamonds for an extreme example)
- low melting point: easy to purify (and melting temp is a decent purity check)
- distinct colour: less useful now but being so distinct from other metals makes it easier to spot vs the many silvery coloured metals
The funny thing is that all these store of value properties also make it less useful: inert means it's not reactive and has fewer forms/compounds
Malleable, lower melting temp and rare makes it a poor choice for typical metal usages...
I think also the scarcity plays a factor, the estimates that I'm seeing after short search being that there's about 10,000x more processed aluminum in the world than gold.
The cap on the washington monument is aluminum, because at the time it was still a precious metal.
The guy who figured out how to electrolyze it out of ore went on to create the main company in the US that produced it, and chose to call it aluminum instead of aluminium, thus leading to the split in spelling. That story may be apocryphal though.
You can trade gold and cash with people a lot more easily than an equity in your brokerage account.
A court cannot generally find that I must furnish someone with some weight of gold for example but they can find a monetary value in sovereign currency which I must supply.
As a daily currency, it also has sharp downsides, but at least it’s not all bad.
Inflation means "interest" on gold, measured in reliable currencies like USD or EUR, is at least 4%. Far more than you will get from any bank.
Of course this goes for anything, so you might want to select something with less regulation attached to it. On the other hand, gold is really dense and "liquid" (easy to sell), which are great advantages to have for a store of wealth. And then there's the recent history of gold prices (which is due to the third world attempting to use anything but dollars but not succeeding at it, but one assumes it will end)
But yes, gold makes less than you'll probably get on the S&P500.
Only for very large amounts of money. It can't easily be subdivided. Oh and this is illegal in most countries.
But yeah, what people forget is that gold is incredibly dense. Nearly double lead's density. This means 1kg of gold is about the size of a nokia 3360, and worth close to 150,000$. A very large amount of gold doesn't take up much volume at all.
... which also means that people "stealing gold" like in the bond movies is totally unrealistic. If you loaded a pallet of gold bars (12.5 kg a piece, 200 gold bars, about 2.5 tons, 375 million USD) into a standard van, that van would probably just break down. And carrying 10 gold bars, 20 million USD in a backpack? Not happening.
(which frankly Trump is abusing because of course the density of gold means that any facility storing gold, including Fort Knox, is going to "look empty")
The staying power of gold is a value in itself.
Until recently it was an "Oil Standard". But now we are in transition from Oil to Renewals. I think that transition is causing some if not most of the political issues we are having now.
With renewals, the source is always available and everyone just needs to purchase the means of accessing it once. With Oil, you need to constantly "pay" someone to get that energy, so many people/companies know their gravy train is ending and they are doing all the can to keep us using fossil fuels.
Also there is an on-going struggle on who produces the items needed to access sun and wind power. Right now China is easily winning that struggle.
-- Proverbs 16:16
-- Psalms 19
Hydrocarbons? Everything from making life to providing energy.
Silicon? Making silicon chips.
Oxygen? I like breathing.
The supply of gold is always inflating. One day we will have asteroid mining of gold and it will be inflated even more. Bitcoin doesn't have this problem.
Nobody will accept your gold for a cup of coffee in day to day life, but restraints and coffee shops will increasingly take your bitcoin over lightning.