Why Is Gold So Valuable?

Scarcity: all the gold ever mined

About 222,600 tonnes of gold had been mined in all of history by the end of June 2026, the World Gold Council estimates, and around two-thirds of it since 1950. Melted into one block, it would make a cube about 22.6 metres on each side. At the end-June benchmark price the Council values it at $29.0 trillion.

New supply is small next to that stock. Mines produced 3,671.6 tonnes in 2025, about 1.6% of everything above ground. For comparison, the Federal Reserve's M2 measure of the dollar money supply grew 5.7% in the year to September 2026, from $22.15 trillion to $23.41 trillion.

What is left in the ground is limited too. The Council puts known reserves, the part of deposits that can be mined at a profit, at about 61,000 tonnes, and the US Geological Survey at 66,000 tonnes. Either figure is less than a third of what is already above ground.

The Council rounds each category to the nearest 100 tonnes. "Other" includes gold used in technology and stocks that cannot be assigned to a category.

Durability: almost none of it is used up

Gold is a noble metal: it does not oxidise under ordinary conditions, the US Geological Survey notes, so it does not rust or corrode. It is also the most malleable and ductile of metals and very dense, with a specific gravity of 19.3 against 11.4 for lead. Because it does not break down, the World Gold Council says, almost all the gold ever mined still exists in some form.

That changes how supply works. Old jewellery, coins and scrap can come back to market whenever the price makes it worthwhile. Recycling supplied 1,404.3 tonnes in 2025, 28% of the year's total supply of 5,002.3 tonnes. Most gold changes owners rather than being used up.

It also means the existing stock is the market. A year's mine output is small next to it, and the World Gold Council's price model treats investment demand as the main driver of gold's returns in the short run.

Money before and after 1971

For most of the 20th century the dollar was defined in gold. The Gold Act of 1900 fixed it at $20.67 an ounce. The Gold Reserve Act, signed on 30 January 1934, transferred all monetary gold in the United States to the Treasury and reset the price at $35, cutting the gold value of the dollar to 59% of its 1900 level, according to the Federal Reserve's history of the act.

After the Second World War, under the Bretton Woods system agreed by 44 countries in 1944, other currencies were fixed to the dollar and the dollar was fixed to gold. That ended on 15 August 1971, when President Nixon closed the gold window. Foreign governments could no longer exchange dollars for gold, and in the Federal Reserve's words the international monetary system in effect turned into a fiat one.

Since then the price has floated. At the 27 October 2026 COMEX settlement of $4,074.60, an ounce costs 116 times the official $35 price of 1971; put the other way, a dollar buys 99.1% less gold. The US government still holds 261.5 million ounces, 56% of it at Fort Knox, and the priced-in-gold tool shows what a house, a barrel of oil and the Dow have cost in ounces since 1971.

Central banks still hold it as reserves

Gold stopped backing the dollar in 1971 but stayed in central bank vaults. Central banks hold about 39,000 tonnes, 18% of all gold ever mined, according to the World Gold Council. Unlike a bond or a bank deposit, a bar in a vault is not a claim on any other government or bank.

Official holdings reported to the International Monetary Fund, converted from fine troy ounces to tonnes:

The IMF figures come from the Reserves Data Template each country reports, at 32,150.7 troy ounces to the tonne.

Central banks have also been the steadiest buyers. They added 1,092.4 tonnes in 2024, 863.3 tonnes in 2025 and 345.4 tonnes in the first half of 2026, per the World Gold Council. Buying is not one-way: in March 2026 Turkey's central bank used about 50 tonnes as collateral, mostly through swaps, to raise liquidity. How that buying fed the rally since 2024 is covered in why gold has been going up.

Jewellery, technology and investment demand

Jewellery is the largest use of gold each year. Industry is a small one. The World Gold Council's demand figures for 2025:

Technology, mostly electronics at 270.4 tonnes, took about 6%. Gold also goes into dentistry and aerospace, the US Geological Survey notes, but industrial use is too small to set the price. Silver is the opposite case: about three-fifths of US silver use in 2025 went into electronics, solar panels and other industry, on US Geological Survey estimates, as covered in why silver has been going up.

Jewellery is sensitive to price. As the average LBMA price rose 44% in 2025, to $3,431.5 an ounce, jewellery consumption fell 18% to 1,542.3 tonnes. Investment moved the other way, up 84% to 2,175.3 tonnes.

What gold does not offer

The same qualities have costs, and the record shows them.

• No income. Gold pays no interest or dividend. When yields rise, so does the income given up by holding it: in September 2026 the 10-year Treasury yield rose 53 basis points to 5.3% and gold fell 8.5%, according to the World Gold Council.
• Long losing stretches. After January 1980 the monthly average price lost 83% of its value in today's dollars by April 2001, and did not regain the 1980 level in real terms until February 2025.
• Volatility. Thirty-day realised volatility rose above 50% in the first half of 2026, against a 20-year average of 17%, the Council reported in July.
• Holding costs. Physical metal has to be stored and insured, and dealers buy and sell at different prices.

Gold's value rests on the expectation that it will hold purchasing power over long periods while paper currencies lose it. Measured from 1971, that has held: the price is up 116 times while US consumer prices are up about 8 times. Measured from the 1980 peak, it took until 2025. The record high and the falls that followed are set out in our guide to gold's all-time high.