|How was it decided that elements like Gold are
worth so much money and that elements like
Aluminum are practically worthless?
|Question Date: 2005-05-25|
Your question is a very good one and is almost
more about economics than geology.
are not set by any one organization, but are a
balance between the cost of producing a mineral
(extracting it from the ground and purifying it)
and what people are willing to pay for it. Gold
is very rare and relatively expensive to produce,
so the base price must be fairly high. If lots of
people want to use gold and are trying to buy it,
they will have to compete with each other for the
gold and that will drive the price up. If not so
many people want the gold, the price will stay
closer to the actual cost of production. Aluminum
is much more common in the earth's crust than gold
(8% of Earth's crust), so it is cheaper to
produce. Iron (another cheaper one) makes up 5%
of Earth's crust.
If you want more
information on this, I would try asking an
There are two major factors that go hand in hand
to determine the value of different
elements:abundance & popularity. Another major
factor is work.
Elements that are very
abundant such as Aluminum are very cheap. This is
because aluminum can be found everywhere.
Although Gold is still quite abundant because of
its popularity it has become very valuable. There
are some elements that are not very abundant and
are not very valuable --but as popularity of these
elements increases, so does the value. An example
of this is Ruthenium.
Now work, a person's
time is of some value so if a lot of work goes
into mining or harvesting different elements this
adds to the value of these elements as well.
This answer is going to involve both some
chemistry and some economics, so get
The key here is rarity -- rare
things are more valuable. If you have a friend
who collects baseball cards, he can tell you that
a Babe Ruth card from 1930 is worth thousands of
dollars because there are very few of them around,
whereas a Derek Jeter card from 2001 isn't worth
much at all because almost anybody can find one.
It's the same thing with precious metals -- gold
is a very rare element, so it's more valuable than
common elements such as iron.
lets gold work well as a currency. Currencies
only function well if they have a relatively
stable 'volume' (when economists talk about
volume, they mean the total amount in
circulation). This is why the US Government
controls the supply of dollar bills so there are
only a certain number in circulation at any given
time. If everyone could just print their own
money, it would quickly lose value and be a
worthless currency (think about it -- right now
you'd take $10 to mow your neighbor's lawn,
because you can then use that $10 to buy something
else. But if you can just print your own $10,
you'll no longer accept dollars as payment for any
service you perform). Gold is really hard to come
by -- you can't just go dig up a bunch of gold in
your back yard -- so it has a stable volume and
therefore maintains a relatively constant value.
We are still mining gold, so the global volume of
gold is increasing, but only very slowly.
The other reason gold works so well as a currency
is chemical -- gold is one of those metals that do
not readily oxidize, so gold coins will maintain a
constant weight. Iron coins wouldn't work very
well -- if you aren't careful with them, your
money will rust away. Copper coins aren't
especially good either, because when they oxidize
they will gain some weight (from the extra oxygen
atoms). So if the weight of a copper coin will
depend on how old it is and how long it's been
sitting out in the air and turning into copper
oxide. If you want a currency to be based on the
weight of coins (which is really the only option)
this is bad news.
So gold is rare, has a
fairly stable volume, and doesn't rust away. This
makes it a useful currency and so it was our
primary currency for thousands of years (actually
until the 1970s when President Nixon stopped the
direct link between the value of the US Dollar and
the value of the US gold reserves).
might have noticed that I have used iron instead
of aluminum as a counterexample to gold. Humans
have only been able to isolate aluminum from
bauxite ore relatively recently, so it was not
around in ancient times to compete with gold. If
it had been, it might have actually fared quite
well -- aluminum is a very handy metal that is
harder and lighter than gold, so it makes better
tools and weapons. It's also not terribly common
-- most of our aluminum comes from a few mines in
Australia, I believe. But aluminum does oxidize
(although only very slowly) so gold would still
have the upper hand there.
This is a very interesting question. Gold is
relatively rare in the earth's crust, and
particularly because of its value in making
jewelry, it has always been worth a lot of money.
Aluminum is very common, and is nowadays, easily
formed as the pure metal, so it is not very cheap.
However, about 150 years ago, the current process
of extracting aluminum from its oxide did not
exist, and it was actually more expensive than
gold. So it is important to recognize that the
process by which an element is obtained plays a
big part in what it costs.
Rarity is definitely one issue. H2O is
not very expensive because there is a lot of it
around. Silver and Gold on the other hand, like,
say, diamonds are very rare. On top of that, the
usefulness of a substance makes its price high. Au
(gold) is very useful because it has some
excellent chemical properties (very inert) and
also its malleable and can be worked as body
decoration (rings and bracelets etc.) Diamonds
have industrial use because they are very hard and
are good abrasives.
So the common elements
of rarity and usefulness to humans make for their
great worth. Al(aluminum) is all over the place
...about 15% of any rock is
Al2O3...hence its very
common and easy to get.
The price of metals depends on their value to
humans, their availability, and how difficult it
is to extract them. Gold has always been valued
because it is pretty; it does not tarnish, so you
can make statues and jewelry and it does not turn
black with age; it is soft so you can mold it, and
it melts fairly easily. It has been used in
jewelry and worship for thousands of years.
Aluminum is more abundant, and lighter than gold,
but is getting depleted from the ground, so it's
getting more expensive, but is not considered a
The short answer is because the market says so.
Over the course of thousands of years of trial and
error, consenting adults engaging in commercial
acts settled on it to perform the function of
money. Why did people choose gold? Because, over
time it was identified as having the greatest
liquidity of all possible contenders. A person
bringing a relatively illiquid item to market
could swap it for gold, secure in the knowledge
that he could later use that gold to get whatever
he wanted. So for example if someone wanted to
get rid of a boat, they could exchange it for
gold, knowing that they would be able to reuse the
gold later to buy something else.
element gold was probably chosen for the following
Rarity. Gold constitutes only
about 5 parts per billion of the Earth's crust. It
is also difficult, dangerous and expensive to
extract. Anyone who has actually been down a
mineshaft knows just how precious a metal it
Indestructibility. Gold doesn't tarnish
Density. Gold doesn't take up
much space. All the gold mined in human history
amounts to about 130 thousand metric tons, an
amount which would only fill about a 100 foot cube
if gathered in one place.
divisibility. You can stretch it, pound it thin,
and divide it into multiple tiny
Controlled expansion. This is the
most important quality. Gold can only be produced
in limited quantities, currently at a peak rate of
about 2,500 metric tons, or roughly 2%, each year.
No matter what wars or social programs urgently
You must also remember that
gold is not valuable to all cultures. The Maya
had plenty of gold but didn't value it highly.
They used various shells to act as currency.
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