Why Has Gold Always Been Valuable?

Walk into any history museum and you’ll see gold everywhere: Tutankhamen’s funerary mask, ancient gold coins, ceremonial jewellery, gold medals, and gold artifacts from thousands of years ago. It’s clear that, to humankind, gold stands out amongst other precious metals. But why has gold always been valuable? And why is gold more prized than rarer metals like rhodium?

In this blog, we explore how gold’s history as a medium of exchange, its unique physical properties, and how gold’s value has fluctuated over time. We also look into what affects gold prices and what the future of gold might look like.

How did gold become a medium of exchange?

The earliest societies used bartering as a form of trade, but that’s not the most efficient way to pay for things. It only works when both sides want exactly what the other offers, and that doesn’t always happen.

When societies started to expand, and trade developed, people began to look for a more reliable medium of exchange. They tried various things, including seashells, grains, and beads, but all of them were either too perishable, too common, or too difficult to divide. Eventually, people turned to gold.

But how did gold become the most suitable candidate for currency? The decision wasn’t purely random. If you look at the periodic table and ask, ‘Which of these elements could realistically become money?’, you’ll find that most elements simply don’t work.

Noble gases & liquid elements

Let’s start with the noble gases and halogens. Of course, a gas couldn’t serve as a form of currency. It’s colourless, hard to contain, and impossible to distinguish by sight. Then there are liquid elements like mercury and bromine. These are equally unsuitable – they’re toxic, corrosive, and impossible to store safely in your pocket or a pouch.

Alkaline metals

If we move to the far left of the periodic table, we start to lose even more options. The alkaline metals are dangerously reactive. If you drop sodium or potassium into water, it’ll ignite or explode. Clearly, that’s not what anyone would want to happen to their savings.

Radioactive metals & synthetic elements

Let’s move on to the radioactive elements. Obviously, a currency that causes radiation poisoning wouldn’t work, so there goes thorium, uranium, and plutonium. Synthetic lab-made elements, which exist for just a few moments before decomposing, aren’t any better. So we can say goodbye to rutherfordium, seaborgium, ununpentium, and einsteinium.

Rare earths

Then we’ve got the rare earth metals, which despite the name, exist abundantly enough to not be considered valuable. More importantly, they’re all too chemically similar to one another so you wouldn’t be able to tell which metal you’re holding. That wouldn’t work for a currency.

Transition & post-transition metals

That leaves us with the middle area of the periodic table, the transition and post-transition metals. This group includes iron, copper, aluminium, silver, and gold. You might think most of these look like promising options, but let’s look at each one in more detail.

First, we’ve got titanium and zirconium. These metals are extremely durable but they require extreme heat to smelt. You’d need to get your furnace up to 1,000℃ before you could extract these metals from their ore, and ancient societies simply didn’t have the technology to do that.

Aluminium is also difficult to extract, and on top of that it’s too soft for stable coinage. So what about iron and copper? In theory, both of these metals would make great coins, but they both corrode over time. Nobody wants a currency that could crumble in humid air or slowly turn green. Lead can be ruled out for the same reasons. Although both of these metals have been used as money in the past, those currencies did not last long, and we know why.

Platinum group metals

Once we’ve ruled out the reactive, poisonous, unstable, overly abundant, overly rare, or technologically accessible elements, we’re left with just eight contenders: platinum, palladium, rhodium, iridium, osmium, ruthenium, silver, and gold.

These are what we call the ‘noble metals’. They’re chemically stable, non-reactive, and naturally resistant to corrosion. They’re also relatively rare, an important criteria for a currency. For example, iron is so abundant that it wouldn’t make a viable option for money. You’d have to carry some massive coins for anything to be valuable.

Most of the other metals have the opposite problem – they’re so rare that you’d have to produce coins so tiny that they’re impractical to use (and easy to lose!). Platinum-group metals also have extremely high melting points, so they wouldn’t have been mined or minted easily in the past.

Read: How to Invest in Platinum: Tips & Strategies

Gold and silver

That leaves us with two realistic options: silver and gold. Both of these metals melt at reasonable temperatures, resist corrosion, and are rare without being impossibly scarce.

But between these two metals, gold has a few advantages:

• It doesn’t rust or tarnish. Silver reacts with trace sulphur in the air, making it turn dark unless it's constantly polished. Gold, on the other hand, maintains its colour and shine for hundreds of years.
• It has a relatively low melting point and can be easily stamped into gold coins or gold bars.
• It has a deep yellow colour that makes it stand out amongst other metals, most of which are silvery-coloured. This makes it easy to recognise and more difficult to counterfeit.

And voila, we now see how gold naturally became the universal metal used for currency. It’s chemically uninteresting, physically stable, visually distinctive, and sufficiently rare. It also survives for thousands of years, unchanged.

Gold’s physical properties

Let’s look a bit deeper into the properties that make gold valuable:

• Rarity: Gold is rare enough that it takes effort to acquire it, but not so rare that it’s practically impossible to mine. This is an important balance, because if a metal was too common (like iron), its value would be diminished. On the other hand, if it's too rare, it’d be impractical to use. Gold sits in the sweet spot.
• Appearance: Gold’s natural yellowish colour makes it instantly recognisable amongst other metals. It’s also able to maintain its appearance and colour for thousands of years thanks to its anti-corrosive and anti-tarnishing properties.
• Malleability: Gold is one of the easiest metals to work with. It’s soft and malleable, and you can hammer a single gram of gold into a sheet nearly a square metre in size. This makes it easy to turn into coins, gold jewellery, and other ornaments.
• Conductivity & corrosion-resistance: Gold doesn’t conduct electricity as well as some other metals, like silver and copper, but its corrosion-resistance makes it valuable in certain uses. For example, electronics, aerospace components, and medical devices rely on gold because it won’t degrade or oxidise.

Keep Reading: Uses of Gold - What is Gold Used For?

Gold’s ups and downs over time

Even though gold is considered a stable store of value, its price and perceived importance have fluctuated a lot throughout history.

One of the most famous examples was in the 14th century, when Mansa Musa, the ruler of the Mali Empire and one of the wealthiest people in history, travelled to Mecca with a caravan full of gold. During his pilgrimage, he stopped in Cairo and spent so much that he sunk the value of gold and sent the country into a depression for over a decade. This story shows us how an excess supply of gold can send its value plummeting.

More recently, we’ve seen gold’s price move through pronounced cycles. During periods of high inflation, political instability, or financial crisis, investors often turn to gold for its safe haven appeal. We saw this in the late 70s, when gold surged from $217 an ounce in 1978 to $850 an ounce in 1980, amidst high inflation, economic uncertainty, and geopolitical tensions with Iran.

See: Exploring the Role of Gold as an Effective Hedge Against Inflation

But during the dot-com bubble of the late 1990s, gold prices dropped below $300 per ounce as investors chased technology stocks and dismissed gold as being ‘old-fashioned’. Between 1985 and 1995, gold lost more than a third of its value.

Over the last two years, gold’s price has been soaring to new heights. In 2023, gold was valued at around $1,910 per ounce and just two years later, in 2025, it sits at an all-time-high of $4,368 per ounce.

When you look at gold’s history, you see that its value doesn’t rise in a straight line. There are noticeable ups and downs, and it all depends on the context of the time.

What affects gold prices?

To understand gold’s value, we also have to understand the factors that affect gold prices:

Gold’s safe-haven status

Gold has long been considered a safe-haven asset that helps protect investors during periods of economic or political uncertainty. It’s not exposed to external market or political factors, like currencies or commodities, so its performance isn’t tied to any single government or industry. Because of this, gold demand tends to increase when uncertainty rises, bringing its price up with it.

Geopolitical tensions

Wars, trade tensions, sanctions, and any other geopolitical conflicts can all push gold prices higher. This is again thanks to its safe haven status, although sometimes conflicts and sanctions can constrain gold supply, bringing prices up.

U.S. dollar

Even though the dollar is no longer pegged to gold, the two remain connected. Gold is denominated in U.S. dollars, so a weaker dollar makes it cheaper for foreign investors to buy gold, supporting higher prices. A stronger dollar has the opposite effect, often pushing gold prices down.

Learn More: Is There a Correlation Between the US Dollar and Gold Prices?

Inflation

Gold is generally regarded as a hedge against inflation. When the cost of living increases, investors look for assets that preserve purchasing power. This can increase gold’s prices.

Interest rates

Lower interest rates support higher gold prices while higher interest rates can push prices down. This is because when interest rates are high, investors turn to interest-bearing assets like savings accounts or bonds. When rates fall, the opportunity cost of holding gold decreases, making it more attractive.

Gold production

Like other commodities, gold prices depend on supply and demand. An excess of supply can push prices down, while constricted supply can support higher prices.

Keep Reading: What Drives the Price of Gold?

Could gold ever lose its value?

It’s extremely unlikely that gold will ever lose its value. Its properties are too unique and unlikely to be matched by any other material.

That said, if one thing could destroy gold’s status it would be the discovery of massive, easily accessible gold deposits that dilute scarcity. This would make gold abundant, losing its value as a rare metal.

The future of gold

Even though gold has been valued for thousands of years, that doesn’t necessarily mean that it has a place in the future – particularly when the world is moving towards digital currencies. But the truth is, gold’s soaring prices tell us that there’s still a place for this precious metal as a store of value.

On top of that, central banks continue to buy gold, with about 20% of all the gold ever mined currently held in central bank reserves. According to the World Gold Council, central banks have accumulated more than 1,000t of gold in each of the last three years, up significantly from the previous decade. This shows that gold still provides a form of security that intangible, digital assets can’t match.

It’s not just psychological comfort that physical gold provides, either, it backs that security with real, tangible value. Even outside the world of investments, gold has a role in electronics, medicine, and aerospace engineering, so it’s unlikely that demand will go anywhere.

Buy gold bullion bars and coins

If history tells us anything, it’s that gold has always served as a reliable and tangible store of value. If you’d like to add this enduring asset to your portfolio, the best way to do so is with high-purity, investment-grade gold bullion bars and coins.

At StoneXBullion, we stock an extensive range of gold bars and coins from the world’s most trusted mints and refineries. Browse our selection and invest in this timeless metal today.