So Why Gold? (Specifically) - continued from (Why Have We Used Gold as Money for over 5,000 Years??? Intrinsic Value? I Think Not...)

this is a continuation of my previous article "Why Have We Used Gold as Money for over 5,000 Years??? Intrinsic Value? I Think Not..." here: https://steemit.com/money/@hyperbolicist/why-have-we-used-gold-as-money-for-over-5-000-years-intrinsic-value-i-think-not

So this specific part of the discussion actually holds some personal significance for me. It started with a conversation I was having with my dad. I don't actually know if it's intentional, but since I can remember, my dad's almost always addressed me consistent and very particular manner...what I'd roughly describe as a combative form of the Socratic Method. You can imagine what a fun childhood I had. Hah.

I'm by no means an expert in finance or global macroeconomics, and really my dad should be the one telling me about this stuff. He actually worked at the San Francisco Fed for years doing research! (That fact never ceases to blow my mind, especially because, in spite of my best efforts, he's never considered ascribing any possible criminality, or even anything remotely malicious, any possible intentional wrongdoing, to the Fed...which I think is testament to the degree of well-oiledness they've got this machine running on.)

Anyway...after illustrating the dismal state of the economy everywhere around the world with publicly verifiable numbers, and shooting down the typical asset classes that are desireable during downturns, bear markets, times of economic/financial uncertainty, etc., the only asset left standing was gold (and silver and other precious metals--for convenience I'm just lumping them into "gold" most of the time). I don't know when they stopped including gold in the curriculum of business or finance majors, but I guess it wasn't a huge deal in the universities since the 70s (maybe there's some connection to Nixon closing the gold window?).

So he started with the basic questions, like "why gold at all"? I suppose he was thinking that people had just happened to decide on gold as the standard for money, and so we could just as arbitrarily switch to something else (I mean, we could, but I'm saying there is logic behind this). So my reply was "what else"? And I meant that seriously. There's a general consensus of what "good money" entails. I think at least some of the criteria originated from Aristotle's definition and I'm not sure who or how the rest were formulated, but they are usually:

Portability, Divisibility, Durability, Scarcity, Fungible

And these can be combined through generalization or split up into more categories through specification, but this is just an easy number to talk about (though I won't do it here, but maybe in a future post).

Ok, so what DO we have available to us? As far as I know, most of the stuff around us is made up of atoms, that form elements, as well as combinations that form many compounds and mixtures. But a pure element is desirable, for the sake of fungibility.

Ok then, let's take a look at what we have...

Starting with the elements we can rule out the obvious. I doubt many out there would like their money in gaseous or liquid form:

Yeup, and among the solids, we can eliminate stuff that's dangerous. So anything toxic, anything that reacts violently, and anything radioactive. Let's also include stuff that lasts only for a fraction of a second inside a laboratory just because...

As we narrow it down, we can see that we're most looking at metals, but only a few will meet all the criteria for good money. Some are, like aluminum, too weak (durability) and too common (scarcity). Others are, like iron, susceptible to corrosion or other reactions (durability).

After eliminations based on individual properties, what we have left, are Gold (Au) and Silver (Ag), and the platinum group metals: Ruthenium (Ru), Rhodium (Rh), Palladium (Pd), Osmium (Os), Iridium (Ir), and Platinum (Pt).

(By the way, my chemistry career ended in high school, so I might not have gotten all of the elements and their disqualifications right, especially in the 3rd and 4th ones, so feel free to let me know. These are what I know off the top of my head and through common sense.)

Among these, the ones that best meet the qualifications of money are Gold, Silver, Platinum and Palladium, and Rhodium. Immediately, Gold already stands out due to the fact that it's not a brilliant shade of sparkling gray. Additionally, silver has a minor reaction with the minute amounts of of sulfur in the air, palladium and rhodium coinage can be a little brittle, iridium and osmium are EXTREMELY heavy and difficult to work with (and cool fact, osmium powder ignites spontaneously), and platinum has an extremely high melting temperature (not impossible, just not AS convenient as gold or silver).

And of course, my dad then points out that we could always discover or create something new. I didn't want to cross the cryptocurrency bridge with him yet, so I stuck with physical stuff. Which leads to another advantage of gold.

There's inherently more "honesty" in a money that can't be created, as people with means can just create more at their convenience (coughThe Fed and Friendscough). And how was gold created? The energy required to create heavy elements like gold can't be found on earth, so we know gold comes from space, probably from the explosion of a massive supergiant star. The energy output of which is 10^44 joules (that's a 1 with 44 zeros!), or as much as our own star will produce in 10 billion years (approximately its entire lifespan). But recently, scientists at the Harvard-Smithsonian Center for Astrophysics have postulated that all the gold in the universe might have originated from gamma-ray bursts, during the collision of neutron stars. So either way, gold is rare, from pretty much anywhere in the universe.

Alright, this post was again longer than anticipated, so anything else I planned to cover will have to wait for another post. I just wanted to get this out so that hopefully, more people understand that there actually is logic behind our use of gold as money, far beyond "it's shiny". Thanks for reading, and keep stacking! And...gold diggers keep digging?