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Why is Gold so Expensive?

31/03/2020

If you didn’t consider currency, Gold would be the prime indicator of wealth in the world. There is no
doubt that gold is expensive as hell, but have we ever considered to think why is gold so expensive in the
first place. Gold is not exactly a very rare metal in the first place but its extraction and refinement are very difficult. With characteristics of corrosion resistance, easy workability and high industrial uses in various stages of manufacturing gold have steadily gained its fair share of fame. From ancient times to the modern era, gold has caused many wars and betrayals in the history of the entire mankind and therefore, it has been able to retain its importance over the centuries.

The price of gold not set by any certain organization, rather it is fixed by the cost of production and the
demand in the market. Extracting and refining gold was difficult in the pre-industrial era due to lack of
technology and unlike other metals, gold is difficult to mine and refine even today, therefore it generally
comes with a high base price tag than other metals. Keep in mind, if there is a low global demand for gold the prices should match the actual production costs. If a lot of people are competing towards buying gold at the same time, the prices will generally shoot up and will not be anywhere near the actual production costs.

Any metal that is abundant and easy to extract and refine will be cheap. Aluminium and tin are few such
examples which are readily found in the earth’s crust and are quite inexpensive. Although gold can be
found readily in most parts of the world, its high demand all over the world makes it fairly expensive.
Unlike other metals such as iron that rusts, gold does not fall victim to oxidation and rust away and
therefore is able to maintain a constant weight over its years of existence making it very stable. This helps is the preservation of wealth over decades without the fear of losing out on anything. These are a few of the major factors that contribute to the steep prices of gold.

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