What makes gold valuable and why do people want it? Can we eat it? Can we wear it? Can we build things with it? No, no, and no.

The only reasons gold is valuable are that there is a limited amount of it and people think it is pretty. They want it because they enjoy wearing jewelry that is made out of it and that is what 99% of gold is used for. The key is that people WANT gold but they don't NEED gold.

If people stopped wanting it, the cost of gold would plummet which is simple supply and demand. So, under what set of circumstances could we have a situation where people stopped wanting it?

We saw a glimpse of one last month with the earthquake in Japan. Entire towns were swept away and anyone who lived had nothing. They needed shelter, food, clothing, water, and all the other basic minimums of life that were destroyed in the earthquake. They needed blankets and food....not gold. Do you think anyone standing there in those deserted shells of towns could have gotten anything for a bar of gold? Probably not.

Now you might say that anyone who had gold either on them, in the bank, or in gold stocks could have gotten out of that devastated area and travelled back to civilization and started their life over. If you have money (which gold still is) you have a better chance of starting over. But the key there is that they needed to get back to CIVILIZATION where everything was normal (or mostly normal). Back in civilization people still WANT gold.

People don't NEED gold and they never will to live and survive. So if we ever get to the point in the world where we are all just fighting to stay alive, gold will be absolutely worthless because there will be no demand for it. Water, food, clothes, and shelter will be worth more than gold and those things would be hoarded and traded. That is pretty much an Armageddon scenario I am talking about but it illustrates that if you take the demand for gold away, how it is really worth nothing at all.

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