Gold Isn’t Scarce — So Why Is It So Valuable?

Published: 10-01-2025, 03:43 pm

For decades, sound money advocates have leaned on a simple, tidy idea: gold is valuable because it’s scarce. 

But what if that argument misses the point entirely? 

In his latest video, Alan Hibbard takes aim at the “scarcity” narrative and replaces it with a more precise—and more powerful—mental model: arduousness. It’s not just about how rare something is. It’s about how hard it is to inflate its supply. 

If you’ve ever used scarcity to defend gold… you might want to rethink that. 

Scarcity vs. Value: Not the Same Thing 

Let’s start with a quick thought experiment: if gold is valuable because it’s scarce, wouldn’t metals like rhodium or platinum—both rarer—make better money? 

They don’t. And that’s because scarcity alone doesn’t create value. As Alan points out, you can find all sorts of rare, one-of-a-kind items that are basically worthless. Scarcity without demand doesn’t mean anything. 

In truth, value is determined by utility—how well something solves a real problem. Gold solves the problem of preserving purchasing power over time, reliably and predictably. But that has less to do with how rare it is… and more to do with how difficult it is to increase the supply. 

Why Gold (and Silver) Are “Arduous” 

Alan walks through several charts comparing various metals using different definitions of scarcity: 

• In the Earth’s crust: Gold isn’t the rarest. 

• Above ground supply: Gold is surprisingly abundant. 

• Annual production: Gold and silver are more plentiful than most other precious metals. 

So why do they still function as money? 

The answer lies in the stock-to-flow ratio—the total supply (stock) divided by new annual production (flow). Gold and silver have the highest stock-to-flow ratios of any monetary metals, meaning their supply grows very slowly year over year. 

That slow growth is what makes them “arduous.” They’re extremely difficult to inflate. And that’s the real reason they’ve held monetary status for thousands of years. 

The 12 Properties of Money — and Where Other Metals Fail 

Even if another metal is rarer than gold, it usually fails on other key fronts: it’s too brittle, too hard to melt, too illiquid, or too easy to inflate. 

Alan brings it back to the 12 properties of sound money—durability, divisibility, portability, uniformity, limited supply, and so on. Gold and silver check nearly every box. Most rare metals don’t. 

And unlike fiat currency, gold doesn’t rely on trust in a counterparty. It holds value precisely because it’s resistant to manipulation. That’s why Alan believes we need to stop calling gold “scarce” and start calling it what it really is: arduous. 

Why This Mental Shift Matters 

This isn’t just a semantic argument—it’s about clarity. If your mental model of money is built on fuzzy definitions like “scarcity,” you’re more likely to make fuzzy financial decisions. 

But if you understand arduousness—the difficulty of inflating supply—you can spot good money when you see it. You can see why the dollar fails that test. And you can make better choices about what to hold long-term. 

Watch the Full Video Now 

Alan lays it all out—charts, definitions, and deeper insights—in this concise, clear explanation of what really gives gold and silver their staying power as money. 

This is a must-watch for anyone who talks about, teaches, or invests in sound money. 

Investing in Physical Metals Made Easy

People Also Ask 

Why isn’t scarcity enough to make gold valuable? 

Scarcity alone doesn’t create value — there are plenty of rare items that are essentially worthless. Gold’s true strength comes from its arduousness, meaning it’s extremely hard to inflate its supply. Watch Alan’s full explanation here → 

What does “arduousness” mean in relation to gold? 

Arduousness refers to how difficult it is to increase the supply of a metal each year. Gold and silver have the lowest “inflation rate” of all metals, making them the most resistant to supply shocks. 

Why don’t rarer metals like rhodium or platinum become money? 

Most rare metals fail other key tests of sound money — they’re brittle, hard to divide, illiquid, or easy to inflate. Gold and silver excel across the 12 properties of money, which is why they’ve been trusted for thousands of years. See Alan Hibbard’s breakdown here → 

What is the stock‑to‑flow ratio and why does it matter? 

The stock‑to‑flow ratio measures the total above‑ground supply of a metal compared to its annual production. Gold’s high stock‑to‑flow ratio makes it extremely stable and hard to debase, which is why it’s superior as money. 

How can understanding “arduous money” improve my investment decisions? 

By focusing on arduousness rather than scarcity, you can spot assets that truly hold their value over time — like gold and silver — while avoiding those that are easy to inflate.