With the British pound and the Mexican peso reacting badly to world politics, it’s worth asking why does gold hold its value and remain such a solid investment?
Both the Great British pound (GBP) and the Mexican Peso (MXN) continue to be negatively affected by both the decision to leave the European Union and Donald Trump’s presidency, respectively. That’s why now is a great time sell your gold jewellery if you’re not using it anymore.
At Post My Gold, we offer a FREE valuation, as well as a price match guarantee. If you don’t want to take our offer, let us know and we will send your gold back to you for free. In these uncertain times, it’s great to know you can always rely on gold to maintain its value and sell gold jewellery at a time that suits you.
Why is this, though? Why is it that, at a time when the Great British pound is at a 30-year low, gold remains valuable? As gold and precious metal experts, we know that there are several good reasons for this.
Depending on whether you count theoretical elements or elements that have actually been created in a lab, there are between 117 and 120 elements in the periodic table. However, only 92 of those elements are found naturally; the others have to be engineered by humans to exist.
From a chemistry perspective, gold is perfect naturally occurring element for the job it does. Andrea Sella, a professor of chemistry at University College London, breaks down exactly why very simply. Of the 92 naturally occurring elements on the periodic table, you can rule out most of the right side of the table and most of the left side of the table. The right side is made up of gases and a gas currency would be rather inconvenient. The left side is made up of very reactive elements and a currency which explodes would be rather dangerous.
Then you’ve got all the radioactive elements — which, for obvious reasons, would also make for a terrible currency. Even if they were only a little bit radioactive, we probably wouldn’t want a currency which gives people cancer from prolonged exposure.
In the middle, you have a whole bunch of stable metals (or “noble metals”) which you’ve likely heard of: copper, aluminium, iron and so on. Some of these are used as currency, but only as low-value currency. They’re too easy to find, hard to distinguish and they react to oxygen too easily, which means they eventually become useless.
The other noble metals all have problems, too. Some don’t melt until they are very, very hot, which would make them very difficult to turn into coins. Some are too rare which would mean you would have to use very small coins.
All of this leaves you with just gold and silver, both of which are used as currencies around the world, but gold is better because it pretty much doesn’t react to anything. Silver oxidises and tarnishes over time when exposed to oxygen. Gold, by contrast, hardly changes at all and its unique colour and lustre makes it immediately distinguishable.
As you might be able to tell, here at Post My Gold, we’re experts in a wide range of precious metals (including platinum, palladium and silver) if you ever wish to sell your jewellery for cash. Gold, however, remains the best element for making a currency.
Aside from the chemical perfection of gold, there is also a common sense reason why gold remains valuable: everybody uses it. Though different civilisations had little to no contact with each other for thousands of years, people from different cultures all over the globe came to the same conclusions about gold. As a result, gold is valuable everywhere and it has been for hundreds of years. In fact, gold’s value stretches back even further than that.
Prehistoric gold jewellery has been found all over the world in a vast variety of time periods. The oldest gold jewellery in the world was recently found in Bulgaria and is thought to be over 6,500 years old. In the Americas, archaeologists have discovered gold jewellery in Peru which is thought to be over 4,000 years old.
If gold was valuable 6,500 years ago, 4,000 years ago and today, it’s a safe bet that it will remain valuable in the future. Very little is certain in finance, but gold is something economists can cling to because of the historical precedence of its value. With that in mind, it’s comforting to know that if you sell gold jewellery you’ll always stand to make a worthy profit.
This sounds like an odd thing to mention, but it’s actually very important. We’ve had digital money for decades and paper money for even longer. As a result, only one country still uses the gold standard. So why does it still have value? Because people think it has value.
Since the 2008 financial crash destroyed many people’s faith in the way digital money fools us, gold remains a failsafe. It is a trustworthy and physical material that cultures across the world and throughout history agree has value. Economies work based on confidence, and the reason gold is valuable is because of our collective confidence in it.