Rejoice, people of Earth! News outlets are reporting that NASA is planning to visit an asteroid made of gold and other precious metals! At current prices, the minerals contained in asteroid 16 Psyche are said to be worth $700 quintillion -- enough to give everyone on the planet $93 billion. We’re all going to be richer than Jeff Bezos!

OK, now for the bad news: This isn’t going to happen. Yes, 16 Psyche and other asteroids will probably be mined for their metals. But once those metals start hitting the market in large quantities, they’re unlikely to be precious for much longer. As any introductory economics student knows, price is a function of relative scarcity -- flood the market with gold, and it will go from being a rarity to being a common decoration. Supply goes up, price goes down.

But in fact, there’s a more fundamental reason why a giant golden asteroid wouldn’t make the world fabulously rich. It’s because wealth mostly doesn’t come from big hunks of metal. It comes from the ability to create things that satisfy human desires.

A steel factory represents real wealth, because you can use it to make parts for cars, buildings and so on. A house does too, because you can live in it or rent it out. The skills and knowledge in your head are also a form of wealth, even though they’re not counted in the official statistics. Even a sandwich is wealth, at least until it goes bad.

But a giant asteroid full of gold only adds a little to real wealth. The metal would have various industrial applications and make nice jewelry and dental fillings, but it wouldn’t spark a new industrial revolution, or dramatically bring down the cost of goods and services, or in general make human life much better or more comfortable. Gold doesn’t command high prices just because it’s rare -- plenty of rare things have little to no market value. It’s because it’s rare relative to people’s demand for it. And because a golden asteroid wouldn’t increase the world’s total demand for gold, there’s no way it could create quadrillions of dollars of new real wealth.

Something a bit like a golden asteroid happened once before. In about 1500, Spain conquered South and Central America and discovered large deposits of gold and silver. It then shipped these metals back to Europe and used them to pay for government expenditures (mostly wars). Because gold and silver were used for money at that time, a drop in the value of gold and silver meant a drop in the value of money -- in other words, inflation.

Gold no longer is used as money, nor is the value of modern money pegged to the value of gold or any other metal. Thus, the arrival of a giant golden asteroid would probably not cause consumer prices to go up, and would instead simply cause gold prices to crash to almost zero.

So a giant asteroid wouldn’t make us all billionaires. But whatever space-mining company managed to claim the space rock would still probably be able to make a substantial fortune for itself. It would have to follow the playbook of the diamond company De Beers.

Diamonds used to be exceedingly rare, until large deposits were discovered in the 1800s in South Africa. The British businessman and colonial government official Cecil Rhodes consolidated all South African diamond mining under the De Beers company, an effective monopoly which later was controlled by the Oppenheimer family. Over the years, De Beers managed to defend this monopoly against challenges from various upstarts, by hoarding diamonds when prices were low and flooding the market to destroy competitors.

A monopoly allows a company to limit supply to keep prices high. But De Beers needed more than that in order to prevent diamonds from eventually becoming commoditized -- and so it turned to marketing, launching one of the most effective advertising campaigns ever with the slogan, "A Diamond Is Forever." This convinced couples all around the world that diamond engagement rings were an indispensable symbol of marital commitment. That symbolism represents real value.

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