Gold and Precious Metals

Why is gold still such an important influence on world finances?

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Wiki User
2011-09-19 10:36:07

Gold is useful for many reasons:

1) It is rare. This means that even a small amount is quite

valuable. Whatever you're going to buy, if you buy it with gold,

you won't need very much.

2) It is fungible. This means that if you lend someone a certain

amount of gold, as long as they give you back the same amount, it

doesn't matter if it's the exact same gold you gave them.

3) It is easily divisible. You can break up a gold bar into

several pieces, and then melt them back into the original bar.

4) It is durable, and lasts. Gold will last a long time in

vaults.

5) The supply of gold is, for the most part, steady. This means

that it cannot be affected by inflation like paper money is.


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