Gold is unique from its precious metal relatives – such as silver, platinum and palladium – for a number of reasons. Not by accident, all the gold that has ever been mined since antiquity is still in existence somewhere in the world, unless of course its lost treasure at the bottom of the sea. It has been said that, neatly stacked up in bars, this stockpile could be slotted into the base of the Eiffel Tower. That, more than anything else, tells us that gold has been – and probably always will be – richly desired, acquired and jealously guarded. Not only for fashion, investment, and jewellery needs, but also as an instrument of wealth and power – again stretching back to the ancient world.
Gold has some interesting chemical properties that make it a great material for use in electronics and dental work due to it being non-corrosive.
History Of Gold
So why has gold had this attraction throughout the ages? Appearance-wise, gold jewellery as an adornment has been traditional throughout the centuries. And it is not just kings and queens, emperors, Czars and Kaisers, as well as popes and prelates, who have all been crowned with gold. Wedding rings, necklaces, pendants, you name it – nearly everyone in the developed world will have a piece of gold jewellery – this sector is the lifeblood of the souks in Turkey and religious festivals in India, for example. All of this is because gold is highly valuable – from 700 BC, when coins were issued in ancient Greece, it became the basis on which trade between kingdoms and countries was transacted. Right up until the 20th century, gold was tied to many countries’ currencies – the Gold Standards.
Switzerland was the last country to abandon a fixed link in 1999. Even in this era of economic turmoil and political uncertainty, gold still has a major role to play as an investment vehicle, a hedge against inflation that has never been slayed and as the ultimate currency as it was nearly 3,000 years ago if civilization as we know it were to collapse. It has been said that if there was to be a global nuclear conflict, all that would survive would be cockroaches and Keith Richards. Add gold to that – in a post-apocalyptic world, the yellow metal will come into its own and grease the wheels of barter and commerce.
Uses For Gold
Gold is more malleable than any other metal, so it can be easily worked into any desired shape or size – useful for intricate and delicate jewellery designing. This softness means it is alloyed with other base metals, which will, among other things, make it harder. Copper is the most common, but aluminium, iron and silver also pop up. White gold, meanwhile, is not a contradiction – it is a gold-palladium or gold-nickel alloy.
As one of gold’s key chemical characteristics is that is unaffected by air and moisture, jewellery and coins will not oxidize and not become discoloured. Unlike nearly all other pure metals, which are grey or silver-white, gold in appearance is yellow – decoratively that is much brighter and attractive for fashionistas.
Gold is one of the heavy elements and is denser than lead. A cubed meter of gold weighs 19,300 kg, while a similar lead cube will be 11,340 kg. This is a clue to its origins on our planet way before life on Earth, and indeed back to the actual formation of the solar system when the Universe was in its youth. During this period of extensive supernova nucleosynthesis explosions, metal-containing dusts were scattered and then gravitated towards the infant solar system and planets.
Now here’s the catch – its high density means that all of this newly-formed gold sunk through the still-molten planet to the core. By comparison, all the gold that mankind has mined and used up to now was from deposits near the surface that were lobbed here as asteroids during a much-later ‘heavy bombardment’ part of the planet’s history. So undoubtedly, there is a lot of gold on Earth, but it is much deeper and will be much harder to get at. However, unless we all lose the craving for gold, someone in the future will be developing the technology to get at this gold.
Demand for investment gold (bars, coins and medals) has picked up in recent years, accounting for some 37 percent of end-use consumption in 2011 – a clear sign that the retail end of the market has invested in gold as a means to safeguard wealth against the potential for the financial crisis to escalate. Even in Asia, where gold jewellery has a dual use of an adornment and as an item of wealth/investment, demand for gold bars has picked up.
The same is true in China, where clampdowns on property investment have encouraged investors to buy gold as a means to protect their wealth from the effects of inflation. The proliferation of exchange-traded funds (ETFs) over the past decade means these have now has absorbed some 2,500 tonnes of gold. Since 2004, around 290 tonnes of gold has been bought by ETF investors each year on average, which represents some seven percent of end-use demand.
The most important industrial use of gold is in the manufacture of electronics. Solid state electronic devices use very low voltages and currents that are easily interrupted by corrosion or tarnish at the contact points. Gold is the highly efficient conductor that can carry these small currents. The boom in mobile technology, handheld electronics and computers has led to a 55-percent rise in gold’s use over the past decade – it now accounts for eight percent of total end-use demand.
Gold is produced from mines on every continent except Antarctica, where mining is prohibited. There are several hundred gold mines operating worldwide ranging in scale from minor to enormous. This figure does not include mining at the very small-scale, artisanal and often ‘unofficial’ level.
Supply from mines reached around 2,800 tonnes in 2011, with a further 1,660 tonnes from recycling old gold scrap. The volume of gold from scrap in recent years has picked up significantly – high prices have enticed much old gold jewellery out of the woodwork. In recent years you have not been able to walk down your local High Street or watch the TV without someone offering to buy your gold, leading to a surge in scrap generation.
Demand for gold reached around 4,490 tonnes in 2011. Of this total, around 2,000 tonnes goes into jewellery, 780 tonnes into other fabrication, 450 tonnes was bought by central banks and around 1,200 tonnes went into physical investments products.