Why is Gold the Standard for Money

Dollars. iPads. Gold.

You can't eat dollars or iPads and you can't eat gold.

Well, actually... some people do eat gold.

Huh. Maybe they also ate lead-based paint chips when they were kids.

Back to the post topic...

You can trade dollars for a hamburger at McDonalds.

You might be able to trade an iPad for several hamburgers at McDonalds (if you're trading with one of the better paid higher-ups).

You won't be able to trade gold for a hamburger at McDonalds. Most people working at McDonalds (and most people in America, for that matter) don't understand the value of gold as wealth protection nor the purchasing power of gold.

Why is gold worth anything anyway?

After all it's just another metal that's dug out of the ground. Right?

The answer lies in history.

Lots of history.

Over two thousand years of history.

I'm talking before the Bible, before the ancient Egyptians, Romans and Greeks.

For thousands of years gold has been accepted, all over the known, civilized world, as a form of currency; as a medium of trade.

I say "known, civilized world" because over thousands of years man discovered more and more unknown parts of the world (known versus the unknown and undiscovered) and because the less civilized parts of the world valued other things more highly than gold. (Imagine trading your iPad for fur pelts and a mate.)

No one, single, government, nation, or people made gold important or valuable. But, strangely enough, the majority of people in all the corners of the known, civilized world, considered gold to be important and valuable. Some traded with it; others fought wars over it.

So gold, a shiny yellow metal dug up from the ground, is valuable and universally accepted as currency just because that's the way it's been for thousands of years.

Now other things are considered valuable and are used in trade but none have had the universal acceptance for so many thousands of years as gold has.

Who knows, maybe in the future something else will become more valued than gold. What ever it is, gold already has a head start of a couple thousand years of proven acceptance.



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Related Links:

Can You Eat Gold?

http://quezi.com/14485

Askville: Is Gold Toxic As a Heavy Metal?

http://askville.amazon.com/gold-toxic-heavy-metal/AnswerViewer.do?requestId=1526589