Planet Money - Why Gold? (Classic)

Episode Date: May 15, 2024

In the past few months, the price of gold has gone way up – even hitting a new high last month at just over $2,400 per troy ounce. Gold has long had a shiny quality to it, literally and in the marketplace. And we wondered, why is that? Today on the show, we revisit a Planet Money classic episode: Why Gold? Jacob Goldstein and David Kestenbaum will peruse the periodic table of the elements with one goal in mind: to learn which element would really make the best money.This classic Planet Money episode was part of the Planet Money Buys Gold series, and was hosted by Jacob Goldstein and David Kestenbaum.This rerun was hosted by Sally Helm, produced by Willa Rubin, edited by Keith Romer, and fact-checked by Sierra Juarez. Alex Goldmark is our executive producer.Help support Planet Money and hear our bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney.Always free at these links: Apple Podcasts, Spotify, Google Podcasts, the NPR app or anywhere you get podcasts.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

On this week's Wild Card, we talk with Issa Rae about those moments where our lives could have gone another direction. Definitely wasn't supposed to be with that guy at all, at all, but I still think about it. I'm Rachel Martin. Issa Rae tells us how to make peace with the path not taken. That's on the Wild Card podcast from NPR, the game where cards control the conversation. This is Planet Money from NPR.

In the last couple of months, the price of gold has gone way up. It hit a new high last month, just over $2,400 per troy ounce. Now gold has had a kind of shiny quality to it for thousands of years, both literally, and in the marketplace. It was once used as currency, think gold coins, and even once we went to paper, a lot of currencies around the world were still backed by gold. This was the gold standard. And even though we are no longer on the gold standard in the United States, gold is still special. Hello and welcome to Planet Money. I'm Sally Helm. Today, we're going back in the Planet

Money time machine to an episode where we try to understand, out of all the elements, why gold? What is it about gold that makes people value it so highly? After the break, our colleagues Jacob Goldstein and David Kestenbaum will go through the entire periodic table of elements to figure out which element would make the best money. Does it have to be gold? Because to me, osmium seems like the logical choice. I'm rooting for osmium, the densest element. You know, David, I'm no scientist, but for some reason, I've really got my heart set on lithium. Dude, that is not going to end well. This message comes from NPR sponsor Grammarly. What if everyone at work were an expert communicator?

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script. It's a new podcast from NPR where I invite actors, artists, and comedians to play a game using a special deck of cards to talk about some of life's biggest questions. Listen to Wild Card wherever you get your podcasts, only from NPR. There's this quote that I really love widely attributed to Warren Buffett. The quote is, gold gets dug out of the ground in Africa or someplace, then we melt it down, we dig another hole, we bury it again, and we pay people to stand around guarding it. It has no utility.

Anyone watching from Mars would be scratching their head. Now, that's a little bit of an overstatement. Gold does have a few practical uses. People like it for jewelry. Occasionally, it's still used for dental fillings. And it has these uses in electronics, cell phones. It's a good conductor. But still, a lot of the gold in the world, it's owned by people who aren't doing anything

with it. It's just sitting there. And the question I had, I mean, before I was a journalist, I was a physicist, right? The question I had is, why gold? I mean, it's just this metal, right? We got 118 elements in the periodic table. It's just an atom. It's got 79 protons. That's what makes it gold. But you know, you add one more proton, you got mercury, you add one more, you got thallium. Is there really

anything that's special about it or something so special that it deserves to be the thing that humans have valued for so long? So today we are going to go through the entire periodic table of elements. For those of you who haven't seen a periodic table since 10th grade chemistry class, it looks kind of like a bingo card. It's this grid with a bunch of squares. Each square has an element in it, a type of atom. There's a box for each element that exists, one for hydrogen and carbon, etc. And it's organized into columns.

And the elements in each column have some similar properties. And so today we're basically going to play Periodic Table Bingo. We're going to take the whole table and just try and start crossing stuff off. You're welcome to play along at home. You know, go print out your periodic table and take out a big red pen or something. So we printed out our own copies and we went to visit Sanat Kumar. He is chair of chemical engineering at Columbia University, and the first thing you notice about him are his glasses.

Pink on the top, regular 1950s style plastic frames, plastic lenses. These are dynamite glasses. He bought them in Soho. And he looks like a million bucks in them. He's like the hippest chemistry professor who I've ever seen. So Sanand is perfect for this because he has a chemist perspective.

But he also comes from a place where gold really does have this special status. His grandfather, who lived in the south of India, was fairly well off, had a big house, a big family, and he owned a lot of gold. Growing up, my grandfather had a goldsmith who would work in the back of the house. There were two of them. And they had this little bowl in which there was husk, and they would put a little bit of coal in the middle, and those nice little crucibles, they would melt coal and pour it.

I was fascinating to watch that. They had these wonderful balances that I wish I'd kept because there's these really old fashioned balances that were good down to a milligram. And what was the finished product? What were they making? Jewelry, more jewelry and even more jewelry. You understand the concept of dowries and stuff like that. So if you have seven daughters, you got some dowry to take care of.

So in India, gold really is a kind of currency, was when you were growing up it is now. It's more than a currency. It's how you measure. I mean, people talk about putting currency into your pillows and your mattress right. This was our analog of doing that. You buy gold and you had these big safes and you stored them. It was easier to store than putting money into a mattress because money didn't mean a whole lot. It would burn. Gold wouldn't burn. So they love gold even to this day. Jacob you know what I say to that? Yeah so it doesn't burn. Lead doesn't burn either. OK. OK, so let's get to the bingo then, right? So we're there with Sonat, and we pull out

the periodic table of the elements. And we start with the column on the far right. The elements in this column have a really appealing characteristic. They're not going to change. They're chemically stable. Helium, neon, argon, krypton, xenon, radon. Those are the noble gases.

Correct. So they're good in a way because they're non-reactive. They're not going to change. Big drawback, a gas. That's right. You can have your money in a jar, but then if you open the jar, you'd be broke. I mean, helium is one of those things that will actually leak away. People actually calculated that if you make a metallic container and left it out there helium will diffuse through the container and go away

Because the because the atom is so small so small and it's got very special quantum properties for some reason It just like is able to rush through metal so you couldn't even leave it sealed in a container I mean, that's just bad news all the way around Feeling like super safe about my helium. I know don't worry about it. I got it I got it sealed in a metal box with a quantum mechanics now means I'm feeling super safe about my helium. Don't worry about it. I got it sealed in a metal box. Quantum mechanics now means I'm broke. Basically, yeah. All right.

So if you are playing at home, you can cross out the rightmost column, helium, down through radon. Okay. So rightmost column, gone. Now let's jump over to the leftmost column. It's called group 1A. Hydrogen is on top. That's a gas.

We can cross that out right away. Below that is my pick, lithium and sodium. I don't know how many of you have played with sodium, for example. It's extremely flammable. That would be bad for a currency. That would be very bad. As you go down the table, it becomes more metallic, but they still are very reactive. So you can start ruling out group 1A, for example, as being the most reactive.

And why don't we want a currency to be reactive? Obviously, exploding is bad. Well, lithium is, for example, known very well. You have lithium ion batteries. And if you expose lithium to air, it will cause a huge fire that can burn through concrete walls. So I had a colleague of mine who works on new batteries. And he had a lithium leak.

And it burnt its way through three feet of concrete wall. So that created a few problems. I don't think you want your currency to be sort of doing that in your pocket. All right so I'll give up on my dream of a lithium standard but when Sanath says reactive he doesn't always mean it's gonna blow up or make a hole in a concrete wall. Sometimes it'll just kind of corrode. And that's one nice thing about gold, is that it stays gold. I mean, you'd think you've got gold coins sitting on the bottom of the ocean. They're going to corrode or get all messed up.

But you can find them hundreds of years later, brush them off, and they're unchanged. Nice shiny gold after centuries on the ocean floor. And it turns out this is a pretty rare quality of elements on the periodic table. So Sinat really gets some momentum going now. He starts crossing off a lot of stuff because it turns out that most of the elements on the periodic table are pretty reactive. They like to bond with each other or some kind of chemical reaction happens when they're around each other.

So Sinat crosses out the left-hand column and the next one and the next one and five more columns on the right. I ask him then about these two weird rows at the bottom. They're always kind of broken out separately from the main table. And the elements there have some awesome names like Prometheum, Einsteinium, Kestinbaumium. You wish. All right, there's no Kestinbaumium. Nice try though.

Nice try. You almost got it passed for me. These are referred to as the lanthanides and actinides. And many of them, for example, the actinides are all radioactive. So these are, again, things that would not make a very good coin because you'd come back a half a second later and it would have half decayed or you'd come back a year later and 2% of it would be gone or something. Maybe more than that, but in the process you'd be dead as well.

Okay, you convinced it. We can cross those off. Okay, so we've eliminated the columns on the left side, and we've gotten rid of the columns on the right side, and now we've crossed out those rows on the bottom. And I feel like we're converging in this kind of sweet spot at the center of the periodic table. And all by now, if you're following along at home,

we've crossed off 78 elements. We've still got 40 left. So to summarize our criteria this far, if you want something to serve as money, one, it should not be a gas. Two, it shouldn't be very reactive. It shouldn't burst into flames or corrode. Three, it should not disappear through radioactive decay.

Also, four should not kill you if you hold it in your pocket. And now Sinat gives us a new requirement, a number five. You want the thing you pick to be rare. And here again there's this very elegant way the periodic table is set up that can help us. As a rule of thumb, rarer elements tend to be more toward the bottom of the table. That weirdly is because of stars and supernovas. Turns out all the elements in the periodic table pretty much are forged in stars or stellar

explosions and it gets very hard to make heavier elements because you basically got to stick together a bunch of light stuff. So there are fewer of the heavier elements out there in nature. So this gets rid of a bunch of the light stuff toward the top of the periodic table, like say silicon, which is the key ingredient in sand. Silicon is the most common thing on earth, I think, after carbon. Maybe it's even more than carbon. I think silicon and iron are probably the two most ubiquitous things on earth.

So that makes it have almost no value. I could go to the beach, pick up a bunch of sand, and be as rich as anyone else. That would be like hyperinflation, right? Like suddenly, wait, I got all this sand. That was not worth anything. Well, I think in the end, more than that's one reason, but it's also the reactivity that would come back to play. Another element that's too abundant is copper.

It sounds promising. We make coins out of it. But there's this great backstory here. Sweden, it turns out, has a lot of copper. And back in the 1600s and 1700s, they decided they'd use it as money. But because copper was so abundant, they had to make their coins really big. There's actually one coin worth ten dalers, whatever that means. It weighed 43 pounds.

So I'm going to just knock these set of things out. Titanium, vanadium, chromium, manganese, iron, cobalt, nickel, copper, zinc. Now we're looking for an element that's rare, but we don't want it to be too rare. And unfortunately, that is why my favorite, osmium, a nice blue-gray metal, the densest of all the elements, osmium gets the axe. Osmium is probably one of the rarest things around.

Why? I have no clue. It apparently comes in with meteorites. Osmium and iridium are found in meteorite rock. And so you can find them, but they're very, very hard to find and very hard to mine for that reason. So we shed a tear for osmium, and we are down to just five elements, the final five.

Why does gold win out, and why do its competitors end up on the monetary scrap heap? Also, David and Jacob try to figure out whether this little gold coin they bought is legit. That's after the break. Pro-Palestinian protests have popped up on college campuses across the country. But from the eyes of students, what are we missing? From the outside, these protests are painted as really violent when that couldn't be further from the truth. I'm Brittany Luce, host of NPR's It's Been a Minute, and I'm inviting you to hear

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And that's worth digging into. Next time on It's Been a Minute from NPR. Darien Woods here. As the US federal debt grows, so too does the interest on it. And this year, it hit a milestone. Interest payments this year will actually be larger than national defense spending for the first time. And that's not a small number.

That is one of the largest items in the entire federal budget. That's from our latest bonus episode. It's my conversation with a long-time debt hawk about the potential risks to the economy and when spending makes sense. You can check that out now if you're a Planet Money Plus listener. If that's you, thanks for your support. If it's not, it could be. You get bonus content, sponsor-free listening, and support the work of Planet Money.

Go to plus.npr.org. Ladies and gentlemen, our final contestants are... Rodium, Pladium, silver, platinum, and gold. And David, this is really impressive because Sennat has just based on chemical reasoning and the structure of the periodic table, he's ended up with a list of what actually are precious metals. They're rare, they're stable, they don't react, and they're all expensive. Rhodium sells for more than $2,000 an ounce.

So from this point forward, though, things get a little tougher. So silver, which is on the list, has been used as money. But Tanat throws it out because, he says, it tarnishes. Now, you can polish it off, but the tarnish has silver in it. So when you polish it, you're actually losing some silver. It's not the best choice, so we throw silver out. The way I think about it is that rhodium, palladium, platinum, and gold are the four choices you would come down to.

Take that gold. You thought you were special, but you're not that special. I mean, I'm imagining some parallel universe now where the US had fights about whether we should go off the rhodium standard or where medieval kings had chests of palladium they were fighting wars over. I like the idea of medieval kings and chests of palladiums, but there are a couple of sort of historical problems here. A big one is that palladium and rhodium weren't even discovered until the early 1800s.

Yeah, that's fine, but that still leaves you with platinum and gold. And platinum turns up in streams just like gold, so it could have been platinum. It could have been platinum, but say you're in, you know, ancient Egypt or whatever, you want to make your platinum coins, you're going to need some kind of magical furnace from the future. Can we look at what's the melting point of platinum? I can certainly look at its high. Melting point of platinum is 1772 degrees centigrade. Yeah, Jacob, that's over 3000 degrees Fahrenheit.

In fact, we visited this guy in the jewelry district who told us that melting platinum is a real pain. You have to use this special crucible, which you can only use once, and it's really expensive. Gold, it turns out, is much easier to melt into bars and coins. Just by chance, it melts at a much lower temperature that you can get just by burning coal. And one other pretty compelling historical argument here for picking gold over platinum. One thing you want for your element that's going to serve as money, you want to be able to test it.

So if someone says, hey, trust me, this is money, you want to know you're not getting ripped off. Platinum looks like a lot of other stuff. It's kind of silvery in color. And gold really looks special. It looks like gold. And it turns out gold is something that's actually pretty easy to test.

This is something we went and saw with our own eyes. We went back to visit Hank Mendelson in the New York Jewelry District with our coin. And I said, how do we know this isn't a fake? You sold it to us? I want you to test it. And he did this really simple test. He took out a black stone and some sort of pumice.

This is what we do. What you hear there is Hank taking our coin and scraping the edge against the stone. And it leaves this gold smudge. And then he goes fishing around in his desk drawer. You have this drawer in your desk. And you're kind of rummaging around. And there's all these bottles with clear liquid.

What are all these different liquids in the bottles? It's some form of acid. So here, this is 22 carats. So let's see what happens here. So what he's got is this little bottle. It's a particular strength of acid that he can use to test to see if the gold has a purity of 22 carats. And he puts a drop of it on the stone where he scratched our coin and the smudge stays

there. So that means our coin is 22 carat But then he picks up this gold pendant which he says is 14 carats It's less pure and he does the same test He scratches it and there's a smudge and he puts the acid on it But the result is really different this time just turns and oh, I would totally just vanished Oh, yeah, so it's the you know, so so I do scratch this on every piece of gold we buy. To make sure that it's gold. It's a very treacherous business.

You buy wrong, you are making 2 or 3 percent here, you buy one thing that's not gold, you can lose a whole day's worth of profit. So you don't need fancy equipment, you just got a stone here and some acid, little bottles of acid. That's right. That's what everybody does. Even the little, the small a little the small jewelry store in mom past or that's this is what they use So you've heard the expression acid test This is the kind of thing that expression is referring to and apparently their writings dating all the way back to ancient Greece about using a touchstone to judge the purity of gold and Basically, you rub the gold against the stone and And by looking at the smudge it leaves,

you can tell how soft the gold is and how pure it is. All right, all right. So I was really at the beginning of this thinking that gold was kind of arbitrary. But it turns out you can make a pretty strong case for it. Gold is stable. It's non-toxic. It's rare, but it's not too rare.

It's easy to test. And you could find it just sitting in rivers, this beautifully colored golden thing. Planet Money actually did a whole series on gold where we bought a bit of gold, like a little bit bigger than the size of a nickel, and we learned all about gold and how it worked. If you want to check out the whole series, the link is in our show notes. Next time on Planet Money, there's a dirty little secret about the internet. A lot of the software that the internet runs on is written by small teams of unpaid people, sometimes

just one person. And this system might have led to one of the most audacious hacks in cybersecurity history. This was incredibly well orchestrated. I think somebody should make a movie about this. I mean, I'd definitely watch it. I'd watch it in IMAX. We dive into the story of how the XZ hack went down and what that tells us about the strange economics

of how most modern software gets made. Our rerun today was produced and fact-checked by Willa Rubin. It was edited by Keith Romer. Alex Goldmark is our executive producer. I'm Sally Helm. This is NPR. Thanks for listening.

["Dreams of a New World"] Drake and Kendrick Lamar have been lobbing some serious accusations at each other. You've probably heard the diss tracks and wondered, what's just a low blow and what's actually criminal? I'm Brittany Luce, host of It's Been A Minute from NPR, and I'm getting into what's art and what's worthy of criminal investigation and who those accusations hurt the most on It's Been A Minute from NPR.

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