Gold and silver are referred to as precious metals because they have a high value per unit weight. This might seem self-evident. But why are they valued so highly, and does that mean they are a good investment for you?
This subject can be more fraught with differing opinions than one might think. Different people have different thoughts on the subject. To modern enthusiasts, it is practically an article of faith that gold has intrinsic value. Governments come and go, the argument goes, but gold endures as a store of value. It always has been and always will be.
In this vein of thinking, every society is run by some sort of elites, whether they be called priests, kings, oligarchs or corporate CEOs. Periodic revolutions change this temporarily, but some favored group eventually emerges to take over. That cycle has been repeated endlessly for the last 5,000 years, that we know of, and that's just since the invention of writing. Whatever kind of elites are in place, they always want to distinguish themselves from the 99%. Gold ornamentation is one important way to do that, since gold is beautiful, durable, doesn't tarnish and is relatively rare. In fact, it is true that about a third of the gold mined becomes jewelry.
And of course, gold has been used as money for largely the same reasons. To this day, most governments hold large stores of gold, although the value of their money is no longer based on it. With that kind of demand assured in perpetuity, you can't go wrong with gold. Right?
Well, at the other end of the spectrum are people who don't get why gold should be endowed with the almost mystical powers that the gold bugs assume. Yes, it is useful as an industrial metal and as material for jewelry, they would say. However, the question they ask is, what separates it from any other durable commodity? At the far end of that line of thinking would be the economist John Maynard Keynes and his disciples (which include a large percentage of modern economists), who regarded gold as a barbarous relic. They believed governments to be the proper controllers of money, and that those governments should not be constrained by something so inconvenient as the limited supply of gold. Without its status as money, gold is just a bauble and nothing to get excited about or to treasure, they'd say. These days, cryptocurrencies add another dimension to the subject, creating yet another possible source of gold's obsolescence as money.
