Until about 1800, why did gold have any perceived value?

Question

Related to this previous question, and this one, what gave gold value prior to "modern" uses?

Until its application in EM shielding, electrical connectors, etc, it seems that gold was merely something pretty to look at (a.k.a. "shiny rock syndrome") - but otherwise had no "value", other than its relative rareness.

Compare that to aluminum, which through the time of Napoleon was considered extremely valuable and rare (due to difficulty in mining and processing before modern industrial methods), but now is a commodity - valued for other reasons than its rareness.

Why value gold, then, over any other substance prior to its modern uses?

Answer 1

Gold has specific properties that make it more useful than most metals for monetary and decorative purposes:

• It's extremely unreactive, so it doesn't corrode, rust, or otherwise tarnish. So gold, once pure, stays that way, unless alloyed.
• It's very difficult to dissolve gold with acids - aqua regia, formed by mixing nitric acid and hydrochloric acid, must be used to dissolve gold (or platinum).
• It's easily identified because it's both extremely dense - almost twice as dense as lead - and unusually soft - my understanding is that the mythological bite test for gold coins actually works, although is rather hard on the teeth.
• It is one of the most if not the most malleable and ductile metal. This means it is relatively easy to work, not prone to cracking, can be bent, formed, or pounded flat, and is resistant to 'work hardening'.
• The combination of the above makes it highly useful to produce shiny intricately-crafted objects that last.
• It was easily mined, and often found in a pure or near-pure state (i.e. not an oxide) both freely available in rivers and in seams found in mines.
• It's rare, which means that possessing it becomes a signal of social capital, which itself increases its value.

Gold seems to have been recoverable by ancient peoples in a way that, for example, platinum was not; uses of gold abound throughout history, while uses of platinum before 1500 or so are rare. This would seem to add gold's advantage as a display of wealth, since you need to actually know you're looking at a rare material.

Answer 2

It is as Adam Smith described it, shortly before 1800, with his "diamond-water" paradox.

Water is essential to life, and therefore "valuable," but there is so much of it that the value of the "marginal" (last) cup of water was close to zero.

Diamonds were "useless," (except for jewelry), but were so scarce that people paid a lot just to have a few of them around for comfort. Ditto for pieces of gold.

Answer 3

Gold has a few key attributes historically:

• It's scarce.
• Gold is mined in very localized places. So it's easy for the local king to monopolize production and supply.
• Easy to identify.
• Hard to destroy. (It is non-reactive)

Coins have also been made of bronze, copper, iron, and lead, but the properties of those metals make long-term less desirable.