. . . isn’t gold.

But why not?  Why shouldn’t any durable object that glitters be just as valuable as gold?

Larry White directed me to an amusing headline from The Onion:

U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion.

Is that also true of gold?

What would happen if people woke up tomorrow and realized that there was nothing particularly special about gold?  Might its value also fall to a far lower level?

All of the gold held by central banks and private investors is based on the “shared illusion” of value.  Jewelry is the largest industrial use, but why is gold so valuable in jewelry?  Because it’s rare?  If silver were much scarcer than gold, I suspect that silver would be the more valuable metal.  And even if the beauty of gold exceeds that of other metals, beauty is only “skin deep”, i.e. gold leaf deep.  A gold plated necklace is just as pretty a solid gold necklace.  By weight, almost all of a solid gold necklace is simply an investment; the inside of the necklace is much like a bar of gold in your safe that no one ever sees.  And gold is less and less often used to fill cavities. To be sure, a small portion of gold is used in areas such as electronics, which would assure that the metal has some value even without any “shared illusion”.

I suspect that on pure “utilitarian” grounds (I use scare quotes as I mean practical, not philosophically utilitarian), gold would have a far lower value.  Its value comes primarily from the fact that other people think it’s valuable.  This is sort of like Bitcoin, which does have a modest practical use as a way of transferring wealth without attracting the attention of authorities, but is mostly used as an investment vehicle.  BTW, fiat currency is mostly used to hide wealth, not to make purchases.

Gold differs from fiat currency in one sense; the “shared illusion” is global.  If an asteroid destroyed New Zealand tomorrow, then New Zealand dollars held outside the country might lose all value, just as confederate money became worthless after the U.S. Civil War.   And again, gold does have a few practical uses that would give it some value without any shared illusion, without its mystique.

PS.  Over the past decade, gold has not done well as an investment (especially relative to stocks, crypto and real estate).  Is the younger generation shifting its “shared illusion” from gold to crypto and GameStop?  Is gold becoming seen as an old fashioned shared illusion, held mostly by boring boomers like me?  Perhaps, but it is a long lasting shared illusion, as the chain below is from Ur, 2500 BCE.