Chapters
Shownotes Transcript
This message comes from NPR sponsor, Discover. Heard about Doublenomics? Discover automatically doubles the cash back earned on your credit card at the end of your first year. That means you could turn $150 cash back into $300. See terms at discover.com slash credit card. 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 really got my heart set on lithium. Dude, that is not going to end well.
This message comes from NPR sponsor Greenlight. Want to teach your kids financial literacy? With Greenlight, kids and teens use a debit card of their own, while parents can keep an eye on kids' spending and savings in the app. Get your first month free at greenlight.com slash NPR.
Support for NPR and the following message come from Edward Jones. What does it mean to be rich? Maybe it's less about reaching a magic number and more about discovering the magic in life. Edward Jones Financial Advisors are people you can count on for financial strategies that help support a life you love. Because the key to being rich is knowing what counts.
Learn about this comprehensive approach to planning at edwardjones.com slash findyourrich. Edward Jones, member SIPC. 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. Yeah.
Now, that's a little bit of an overstatement. Gold does have a few practical uses. I mean, 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
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's
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, glasses.
These are dynamite glasses. He bought them in Soho. And he just, he looks like a million bucks and 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. It 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. It 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. Okay, okay. So let's get to the bingo then, right? So we're there with Sanat, 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. 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 atom is so small. It's 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. So I'm feeling like super safe about my helium money. No, don't worry about it. I got it sealed in a metal box with no quantum mechanics and that means I'm broke. Basically, yeah.
All right, so if you were 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 crunch. 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 walls.
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 Sanat says reactive, he doesn't always mean it's going to blow up or make a hole in a concrete wall. Sometimes it'll just kind of corrode.
corrode. That's one nice thing about gold is that it stays gold. You'd think you 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, Sanat 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, you know, some kind of chemical reaction happens when they're around each other. So, Sanat 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 promethium, einsteinium, kestenbaumium. You wish. There's no kestenbaumium. Nice try, though. Nice try. You almost got it passed 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 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, all right, you convinced her. 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. In all by now, if you're following along at home, we've crossed off 78 elements. We've still got 40 left.
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, it should not kill you if you hold it in your pocket.
And now, Sanat 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. Either that or it would be like hyperinflation, right? Like suddenly, wait, I got all this sand. That was not worth anything.
Well, I think in the end, 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 16 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
10 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.
This message comes from NPR sponsor Dell Technologies. During their back-to-school event, learn how Dell is helping underserved communities around the world. Make a difference with Dell and shop AI-ready PCs powered by Snapdragon X series processors at dell.com slash deals.
Support comes from our 2024 lead sponsor of Planet Money, Amazon Business. Everyone could use more time. Amazon Business offers smart business buying solutions so you can spend more time growing your business and less time doing the admin. You'll see why they call it smart. Learn more about smart business buying at amazonbusiness.com.
Support for this podcast and the following message come from AT&T Business. You can cross your fingers and all your toes during a data center migration. You can knock on wood, pluck a dozen four-leaf clovers, or look to your lucky stars for a successful office expansion.
You can hold your breath, shut your eyes, and say all the well wishes to help avoid cyber attacks, but none of that truly helps you. Because next-level moments need the next-level network with the security, reliability, and expertise to take your business further. Take your business to the next level at business.att.com.
This message comes from NPR sponsor, Quince. Planning your next trip, Quince has all the high-quality essentials you'll want for your next getaway at 50 to 80% less than similar brands. Go to quince.com slash pack for free shipping and 365-day returns.
Darian Woods here. As the U.S. 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 longtime 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 Rhodium.
Palladium, silver, platinum, and gold. And David, this is really impressive because Sanat 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 Sanat 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're special, but you're not that special. I mean, I'm imagining some parallel universe now where the U.S. had fights about whether we should go off the rhodium standard or whatever.
Medieval kings had chests of palladium they were fighting wars over. I like the idea of medieval kings and chests of palladium, 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 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? We 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 Mendelsohn 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. It just turns and... Oh, wow. It totally just vanished. Yeah. So I do a scratch test on every piece of gold we buy to make sure that it's gold. And it's a very treacherous business. You buy wrong, you are making 2% or 3% 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 small jewelry store in Mom and Pop store, 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, there are 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 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 a
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.
This message comes from NPR sponsor, Capella University. Capella's programs teach skills relevant to your career, so you can apply what you learn right away. See how Capella can make a difference in your life at capella.edu. This message comes from NPR sponsor, Capella University. Capella's programs teach skills relevant to your career, so you can apply what you learn right away. See how Capella can make a difference in your life at capella.edu.
This message comes from NPR sponsor Shopify, the global commerce platform that helps you sell and show up exactly the way you want to. Customize your online store to your style. Sign up for a $1 per month trial period at shopify.com slash NPR.
