Does Gold Have ‘Intrinsic Value’?
Almost every conservative talk show is pushing gold and silver as a hedge against inflation, the devaluation of the dollar, and protection against uncertain economic times. Glenn Beck has been the most vocal proponent of owning gold, so much so that some liberals have called for an investigation. These are the same guys who create money out of thin air. Typical.
In one particular Beck advertisement for gold, he mentions that gold has “intrinsic value.” I know a lot of people believe this, but gold does not have intrinsic value. Only God does. All other values are imputed.
“Money is a commodity, a real thing which people value. It is the most marketable commodity. In the Bible, money is always gold and silver. Money makes exchange easier, because people can trade their goods for money and use the money to buy other things they want.”1
Cattle, grain, salt, sugar, and other scarce commodities have served as money throughout history. Obviously, these types of monies can prove to be difficult to transport, especially over long distances. And they are perishable. This is one of the reasons why gold and silver are used as media of exchange. It is easier to carry coinage than to haul a ton of grain. This allows the consumer to exchange his gold or silver for needed commodities without having to find individuals who need the only commodity he has to sell. For example, if a farmer has grain to sell and he wants to buy cattle, but the cattleman does not need grain, the grain farmer will have to negotiate a second deal with someone who wants grain plus a commodity the cattleman may want. This can become very involved and time consuming. But if there is an agreed upon scarce commodity that cannot be easily counterfeited, then it can act as the medium of exchange for all other commodities and services.
In Eden, gold holds a special status: “And the gold of that land is good. . .” (Gen. 2:12a). “God provided high quality gold for Adam, and Adam and his heirs were (and are) expected to recognize God’s generosity in this regard. The gift of gold was a fine one indeed. It still is.”2
Gold and silver have certain qualities that allow them to function as money: durability, divisibility, transportability, recognizability, and scarcity. Whatever the culture, gold and silver are recognized as money: “Then Asa [king of Judah] took all the silver and the gold which were left in the treasuries of the house of the LORD and the treasuries of the king’s house, and delivered them into the hand of his servants. And King Asa sent them to Ben‑hadad the son of Tabrimmon the son of Hezion, king of Syria, who lived in Damascus” (1 Kings 15:18; cf. Gen. 24:22).
A kingdom outside of Judah recognized and accepted gold and silver as standards of value. Moreover, since these metals are easily divisible, they can be weighed in order to test their “value”: “And I [Jeremiah] signed and sealed the deed, and called in witnesses, and weighed out the silver on the scales” (Jer. 32:10). As we will see, there are times when gold and silver are not the most valued commodities.
When other essential commodities (e.g., food and water) are scarce, gold and silver lose their value for a time. If you have ever seen The Twilight Zone episode “The Rip Van Winkle Caper,” you’ll understand this principle (view the episode on YouTube).
To escape the law after stealing $1 million worth of gold bricks from a train on its way from Fort Knox to Los Angeles, a band of four gold thieves, led by foreign-accented scientist-mastermind Farwell (Oscar Beregi, Jr.), hide in a secret cave in Death Valley, California. Farwell has designed suspended animation chambers and set them for 100 years, figuring that by 2061, nobody will remember the robbery and the gang will be in the clear.
Coming out of their suspended animation, things begin to go wrong. One of the thieves is dead after a fallen rock cracks his glass-encased chamber, thus releasing the gas that makes their 100-year hibernation possible. (Why anyone would make a hibernation chamber out of glass with no protection surrounding it and put it in a cave is beyond me. Also, the ability to put people in suspended animation was certainly worth a lot more than a million dollars in gold. The inventor could have sold the patent for millions of dollars! Anyway, back to the story.) In very short order, human nature rears its ugly head. One of the thieves is murdered. The vehicle they had stashed away is wrecked. The two remaining crooks are left to carry the heavy ingots of gold through the desert on foot. Water becomes more important than gold. One of the thieves charges an ingot for a sip. At this point, water is more valuable than gold The ending is classic Rod Serling:
When the “fee” goes up to two bars, Farwell strikes DeCruz with the gold bricks, killing him. Farwell then continues to a highway, lugging the gold he refuses to abandon. Finally, weak and dehydrated, he collapses. A futuristic car drives up and Farwell offers his gold to the couple inside in exchange for water and a ride to the nearest town, but expires a few moments later.
As the man named George gets back into his car to report Farwell’s death to the police, he quizzically remarks to his wife, “Can you imagine that? He offered this to me as if it was really worth something.” The wife vaguely recalls that it had indeed been valuable sometime in the distant past. The husband replies, “Sure, about a hundred years or so ago, before they found a way of manufacturing it,” and tosses the gold bar away.
A famine may overtake a people, and all the gold in the world will not satisfy a nation’s hunger (cf. Gen. 41:56). During Joseph’s rulership in Egypt, a famine came upon their world (47:13). While gold was looked upon as money in the past, other commodities proved to be more valuable as circumstances changed: livestock, land, and people. But grain remained the most sought after commodity: “Buy us and our land for food, and we and our land will be slaves to Pharaoh. So give us seed, that we may live and not die, and that the land may not be desolate” (47:19).
The complete breakdown in Egypt’s economy meant that the people were not concerned about the value of gold. Since the population was doing everything possible to stay alive, the people had no desire to possess gold and silver or any commodity other than food. Gold and silver are valued because people believe these metals will be valued in the future. In the case of famine, however, the future is discounted to practically zero; therefore, a desire to own gold declines considerably.
During Germany’s hyper‑inflation period (1922–1923), food became the most valued commodity for those who did not have it. The farmers, who did not live in the cities, received the “valuables” of the city dwellers because inflation destroyed the purchasing power of the German mark. Value was now defined in terms of what an individual needed to survive. This is why “[t]here was a steady stream of pianos, furniture, family heirlooms, gold watches, jewelry, and gold coins toward the farms, and a stream of food flowing the other way. We are talking about the disintegration of money and the markets that money had made possible. It was food, not gold, that was king. What does the term ‘valuables’ mean? Gold, silver, jewelry, precious stones? Why do we call them ‘precious’? In short, what are ‘valuables’? It depends upon external circumstances and the evaluations of buyers and sellers concerning these circumstances.”3 The film The Pianist (2002) depicts in stark detail the nature of value in desperate times.
We impute value to things, and not everyone considers the same things to be valuable. In most cases, gold and silver are valuable because we know other people value them. We are willing to give up what we perceive to be valuable to get something that we believe is more valuable. Collectors will pay tens of thousands of dollars for a rare baseball card or hard-to-find comic book, while others will put their money in a rare painting or a classic automobile. Most of us have no interest in such high priced collectibles.
With devaluation of the dollar, the run-up of inflation, and mistrust of government, gold, silver, and other commodities are rising in value. But the day could come when even gold and silver are thrown aside for a handful of wheat and a cup of clean water. The time to prepare is now.