Gold - The oldest Pyramid scheme

All the gold in the world would only make a cube with a side length of about 60 feet.
Even though there isn't very much of it, almost the last thing a gold speculator would want would be to have the gold delivered to her. Besides the odd jewelry maker or old fashioned dentist, there really isn't that much need for gold in the world, so why the hell are billions of dollars spent on it every year.

Gold being used as money always seemed a bit odd to me. Didn't anyone think it was fishy that you could wake up some day and find lumps of your currency buried in your back yard, where it had been for 5 billion years.

Initially gold was pretty so people liked make pretty things out of it and people would barter turkeys for it. Then gold was used as money because there was a limited supply of it and it didn't corrode, but both reasons are fallacies.

Firstly, the corrosion argument doesn't hold much water as so many materials today don't corrode. Even gold colored plastic would cover this angle.

Secondly, there is not a limited supply of gold, demonstrated with the Spanish flooding Europe with gold after the discovery of the "New World" and in more modern times, there are discoveries of new mines, the largest in the world being in Papau New Guinea discovered only two decades ago. Additionally, physicists tell us that there is mountains of gold at the center of the earth (http://www.abc.net.au/news/newsitems/200606/s1664312.htm) It falls to the core because its heavier than the other elements. Its just lying there for some future digging traveller to dredge up (albeit hundreds of years from now). So, given that some day in the future, gold will probably be worthless, why does everyone want to buy it.

Perhaps everyone buying gold is hoping that someone later will buy it for more. It is the oldest Pyramid system since the Pyramids. People talk about hedging against the stock market or not trusting currencies but gold is the ultimate useless commodity, unlike something like copper that you can do stuff with. Most of it remains locked up as the pieces of paper representing it are passed from hand to hand. Like any Pyramid scheme, it depends on people later buying it for more. People don't talk about anything production related when they talk about gold prices, they talk about human confidence and sentiment. Its a share that will never pay a dividend (like some high tech stocks) so technically can have no value as an investment.

This doesn't mean that you can't get rich buying gold. Lots of people get rich in Pyramid schemes.