It has always seemed obvious to me that the value of an object is determined by its usefulness and its scarcity. Oxygen is essential for life, but it is so plentiful that it does not seem valuable. The right type of bone marrow, on the other hand, is critically important for people with certain conditions, and the difficulty in obtaining it dictates that those people will pay any price for it.

Of course, some artistic items apparently defy this formulation. A Picasso valued at $50 million is no more useful than the drawings that adorn refrigerators, and both are very rare, in fact, unique. Perhaps this discrepancy can be explained by ascribing value to the unique feeling that art aficionados get when viewing a painting or when showing it to others.

1. They are not particularly useful.
2. They are not particularly rare.
3. They are durable.
4. They reflect or bend light.
5. They are elemental. Gold and silver are elements. Diamonds are just crystallized carbon.

One troy ounce of gold currently sells for approximately $1,600. Gold is very heavy; an ounce of gold does not take up a lot of space. The standard gold bar contains four hundred ounces. Thus, an investment of $1,600 gets you only one-fourth of one percent of one of Goldfinger’s bars. You probably would also need to pay a substantial commission.

All three of these shiny rocks have been valuable for a very long time. The wealth of a country or an individual was often a function of how many of them could be amassed. It seems incontrovertible that the looting of gold and silver from the Indians in America made Spain into a powerful nation and kept the Hapsburg empire going for many decades. The number of people who have given their lives in order to obtain shiny rocks or defend them from someone else is staggering, and it probably grows every day.

One argument for the intrinsic value of gold that is often promulgated by those selling it to ordinary consumers seems to be based on its durability. Many commodities depreciate in value over time. Animals die, grain rots, and manufactured goods become obsolete or unfashionable. Gold, on the other hand, holds its value. There is something to this, but other investments, especially real estate, also maintain value.

The other commonly heard argument is that in times of crisis government-backed currency will be useless. Certainly some people have suffered by placing undue faith in certain currencies. However, if the end times really come, civilization collapses, and mankind turns to a barter economy, I seriously doubt that those who have stockpiled food will be interested in depleting their supplies in exchange for some rocks.

Warren Buffett recently articulated the reason that these commodities seems to be shockingly overvalued: “If you buy an ounce of gold today and you hold it a hundred years, you can go to it every day and you could coo to it and fondle it and a hundred years from now, you’ll have one ounce of gold and it won’t have done anything for you in between.” This has always been my opinion, too, but I am beginning to doubt my perspicacity.

Previously I tried to place shiny rocks in the same category as works of art. Gems and jewels do nothing for me, but they seemed to provoke a sense of satisfaction in others. It still seemed weird to me that a few shiny rocks could be worth as much as a car, but no more so than that a painting could be worth millions.

The reason for my change of heart lies in India, the home of a population of over 1.2 billion people that is growing by 1.41 percent per year. Furthermore, the economic growth rate is much higher. It stood at 6.9% in 2011. Thus, India, like China, is a country with an increasingly large number of people with much more disposable income.

Most of the residents of India are Hindus, and, for reasons that I do not completely understand, adherents to the Hindu faith put great store in the purchase of shiny rocks. It is considered extremely propitious to obtain them on one particular holiday, Akshaya Tritiya, which falls in April. Indians are the world’s biggest consumers of gold. Most Indians buy it in the form of jewelry, but investments in gold-based securities are becoming more common. In fact, investments in gold ETF’s in India surged 44% this last year.

So, I now have decided that it is not so obvious that the value of a commodity is determined by its usefulness and its scarcity. Instead, it is determined by its perceived usefulness and its perceived scarcity. In India gold evidently has the perceived usefulness of bringing good luck. I see no reason to think that this appraisal will come to an end any time soon. In fact, more and more Indians will likely be able to afford a little gold. Therefore, the price of shiny rocks will probably continue to rise.

I can relate to this. In medieval times Christians assigned high value to relics (usually bones) of saints. In a book called Furta Sacra Patrick J. Geary makes a persuasive case that the relics were perceived to possess the power to bless and protect the communities in which they dwelt. In addition, every altar in every church was required to contain a fragment of a blessed relic. They became highly prized. It took centuries for this effect to subside. Even today many of the faithful leave ex-votos at shrines containing relics in appreciation of the perceived power of the relic to cure disease or heal injury.

I have never heard of a relics-based ETF. Maybe I should investigate it.