Sweat of the Sun – Properties of Gold

From Mythology to the Economic Standard

The Incas called gold the “sweat of the sun”; the Pharaohs insisted on being buried in what they referred to as the “flesh of the gods”; and Isaac Newton established gold as the benchmark of a new global economy.

Sir Isaac Newton, England’s Master of the Mint, first standardized the price of gold in late 1717. First as gold coins, and later as backing for paper money, gold become the standard by which an economy was measured. It was not until 1971 when the U.S. dollar was no longer directly measured by a gold standard, that gold began to exhibit volatility as a freely traded precious metal.

Gold Properties and Mining

Gold, whose chemical symbol, AU, became valuable due to its unusual malleability, density, longevity, and perpetual shine, became the transcendent symbol of aesthetic and mystical beauty.

Gold ore appears in nuggets or grains in rocks as small veins or alluvial deposits–sediments deposited by flowing waters or rivers, called placer deposits. Alluvial placers form when dense particles such as gold or platinum accumulate where water velocity is no longer strong enough to transport deposits further. Placer mining was prominent in such times as the California Gold Rush.

Placer mining today is much more sophisticated, utilizing excavation methods such as water pressure (hydraulic mining) or by using surface excavation and tunneling equipment.

Gold Consumption

In all of history, only 161,000 tons of gold has been mined–and more than half of this amount has been excavated in the past 50 years. It is surprising also to learn that the U.S. is not the number 1 consumer of gold. But that India holds this title as the largest “gold nation” worldwide (773.6 tons of gold consumed in 2007), followed by China (363.3 tons)–who surpassed the U.S. (278.1 tons) in 2007 as the second largest gold consumer.

Although fine jewelry dominates gold as the primary use for the yellow precious metal, gold is also critical in numerous industries.

In 2007 alone:

• 2,398.7 tons of gold were used to create gold jewelry

• 310.6 tons of gold were used for electronics as a non-corroding conductor

• 253.3 tons of gold were used in exchange-traded funds which have gained immense popularity in the past several years

• 235.6 tons were used for gold investment (or bar hoarding)

• 137.0 tons were used for official gold coins

• 92.7 for various other industrials

• 72.6 tons for medals and special coins

• 57.8 tons for dentistry

Source: National Geographic, Jan. 2009

Uses in Gold Jewelry

14k gold remains the most popular gold karat of fine jewelry in the U.S.; 18k is the standard in most European countries; and 22k is the benchmark for Indian jewelry.

Due to gold’s relative softness as pure 24k gold, the yellow metal is mixed with other alloys to create ductility–the ability to shape gold without fracturing it. Gold color–such as white gold or rose gold–is another variant achieved by mixing various base alloys over others.

Copper is the most common alloy used in yellow gold–but higher concentrations of copper creates the subtle, beautiful pink hue or undertones of rose gold.

Common alloy distributions include:

14K Yellow Gold · 58.33% Gold · 4% Silver · 31.24% Copper · 6.43% Zinc

18K Yellow Gold · 75% Gold · 13% Silver · 12% Copper

14K White Gold · 58.33% Gold · 28.32% Zinc · 4.8% Nickel · 8.55% Titanium

18K White Gold · 75% Gold · 2.23% Copper · 5.47% Zinc · 17.80% Nickel

14K Rose Gold · 58.33% Gold · 2.08% Silver · 39.59% Copper

18K Rose Gold · 75% Gold · 5% Silver · 20% Copper

(Read more about white gold properties)

Because of this alloy comingling, a small percentage of the population experiences sensitivities or allergic reactions to white gold (which contains nickel)–therefore turning to platinum, or titanium as a hypoallergenic alternative.

An Amalgam of History

Gold Remains one of the most alluring of precious metals. It has been said that all of the world’s gold could fit in a 10 meter cube. Newer research suggests that the earth’s molten core may contain massive amounts of gold–”enough gold buried deep within the Earth’s core”, concludes one Australian geologist, Professor Bernard Wood, “to cover the entire land surface of the planet to a depth of half a meter”.

Whether this conclusion is incontrovertible, gold has been the focus of ages–of obsession, of love, of idolatry, and war. From Biblical references as early as Genesis–the blasphemous golden calf to the Old Testament Deliverer of Israel, Moses, who was said to be rich in gold and silver, gold has elicited a complex duality of responses from humanity. From Dirty Gold campaigns to the diminutive hopes of economies like West Africa’s reaping even the smallest of benefits from gold mining in their own lands. Gold remains, literally and figuratively, an amalgam of history.

Featured in this Post, from Apples of Gold:

Men’s Elliptical Link Bracelet in 14K Gold

Figaro Link Chain in 14K Gold

Greek Key Hoop Earrings in 14K Gold

Cushion Cut Blue Topaz and Diamond Pendant

Celtic Cross Pendant in 14K Gold

Mining Companies Prepare for Long “Winter”

Goldminers and the companies they work for are “hunkering down” for a long and difficult winter, but not the one we normally think of. North American mining companies are preparing to ride out the winter of a global economic slowdown; looking to rein in spending and perhaps delay some projects and exploration.

They have come along way since the picture to the right (circa 1874) was taken.  But gold prices fell last week and are expected to fall even further in the face of a strengthening dollar and Euro. The world’s largest gold producers, Barrick Gold Corp. and Newmont Mining Corp., are wrestling with volatile commodities prices, fluctuating oil prices, inflation and the frozen American credit markets. Analysts are predicting they will lower production in the year ahead, but the impact will be even greater overseas, where most of the world’s gold mines are to be found.

“With the way commodity prices have come off in the face of a slowing global economy, what the miners are doing is starting to evaluate all their ongoing projects,” Argus Research analyst Bill Selesky said Friday. “It’s all because of the credit crunch.”

2008 started off as good year for the miners. Denver-based Newmont reported a fivefold jump in its first-quarter net income and Barrick swung to a profit.

But as the global economy began to falter, gold fell. The price is down to around $720 an ounce this month. At the same time product costs, like fuel and machinery, spiked. Gold is competing with the dollar as a safe haven for capital, but it may be losing ground.

“Gold supporters, in our opinion, are losing some faith,” JPMorgan analyst John Bridges wrote in a research note.

UBS on Friday revised its 2009 forecast for gold to $700 an ounce from $825 an ounce. Still the miners believe gold will hold its value compared to other commodities.

Barrick’s founder, Peter Munk says “The decrease in value over the past four or five months in gold is a fraction of what all the base metals, oil, sulfur, wheat, soybean, lead, nickel has gone through, which again, indicates the tremendous monetary value of gold as a means of creating high-level liquidity in terms of panic.”