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

Invest in Platinum: 2009?

At face value, it seems that now is the right time to invest in platinum when you consider the highs and lows of the past 52 weeks. Platinum reached an all-time high of just over $2,300 per ounce in March of 2008 and today tries to hold firm around $940 an ounce–a 60% drop from its primordial heights of 1st quarter 2008.

But a New Year is upon us and things are already beginning to change. With the news of the bloody conflict in the Gaza strip, precious metals prices got a jump-start during the last few days of 2008. Platinum was actually struggling in the mid-800s before the news of increased instability and the breach of the cease-fire in the Middle East.

Still, even in the mid $900s, platinum is at an all time low. It’s hard to imagine such a historically expensive metal going much lower. But is it a good time to buy?

That depends on your time horizon and a very unexpected twist in the precious metals sector: ties to the U.S. automaking industry. In years past, automakers consumed approx. 900,000 ounces of platinum in a single year–for use in their automobile’s catalytic converters. This accounted for about half of all platinum demand worldwide, according to London-based precious metals refiner, John Mattey, Plc.  With the spotlight heavily on the ailing “Big 3″ and the declining automobile industry, platinum took a serious hit in 2008.

Surprise, surprise–what to watch when considering an investment in platinum? Chevy, Ford, & Chrysler–”The Big 3″.

Our recommendation is to hold platinum for those few of you who actually own platinum coins or hold investments–now is certainly not the time to sell, with platinum prices at an all-time low.

Consider buying when you see the first signs of recovery in the auto-industry. The vast and great challenge of platinum investing: with platinum historically and unbearably volatile, timing the market in such a commodity can prove challenging–more so than gold and more familiar precious metals. By the time a recovery is underway, the rug may have already been pulled from under your feet, and platinum may have already shot up 20-30%. It is too late to invest.

Our recommendation: Hold or Buy for Long-term investment (but be prepared to wait!)

Related Posts:

Platinum Prices Related to Big 3 Automakers?

Gold Takes Lead over Platinum by Head

Platinum Wedding Band Prices

Platinum Rings: The King’s Heavy Metal

Platinum and Gold: When Metals Collide

Gold Takes Lead Over Platinum by Head

With a front-running style, favored Precious Gold takes the lead by a head December 15th, 2008, 5:30 Eastern, with Price of Platinum coming in second at a price of $835 per ounce–$2 below gold. The prelude to this historical event was Friday, December 12th, when platinum and gold collided within a $1 spread of each other. Platinum still managed to take the lead last Friday–but not so today.

It’s nothing short of an exhilarating horse race.

What finally put platinum trailing in the sand was unexpected: what else but the failing American auto-making industry. Platinum sank again with news of the U.S. senate’s rejection of the auto “bail out”. This made the difference since the auto-industry utilizes platinum in catalytic converters–and not just a tad. Approx. half of annual platinum demand comes from the auto-sector, which used 905,000 ounces of platinum in 2006!

Gold is clearly the winner over platinum in 2008, since the gold price performed at a 21% decrease vs. platinum’s 65% decline since March, 2008.

For those of you in search of your platinum diamond engagement ring this season, this does not mean that platinum rings will cost the same as gold rings, but now is the perfect time to buy that platinum ring, because platinum prices will be considerably lower in 2009 and possibly to the end of this decade unless the economy rebounds quicker than we anticipated, the auto industry does not substitute another metal for platinum (such as gold) in its catalytic converters, and platinum miners cut production in years to come, thereby reducing supply and effecting demand for the precious metal.

Platinum and Gold: When Metals Collide

Although platinum is 30 times rarer than gold, the two metals’ prices collided throughout the day and finally closed with gold at $822 per ounce and platinum at $823! Today’s $1 spread was nothing short of historical for precious metals; the last time platinum and gold met at such close quarters  was 1996!

Platinum has plummeted 65% for the year; gold has dropped 21%–making platinum next year’s bargain.

Metals had already seen a decline due to decreased consumer demand as a result of the economic downturn.  Adding to the ailment, platinum prices dropped further after the U.S. senate rejected a “bail out” for automakers today–deepening platinum’s fall from grace because of decreased demand for platinum in automobiles who use platinum for catalytic converters.

(Bloomberg) — According to London based metals refiner, John Matthey Plc, automakers make up about half of the world’s platinum and palladium demand. In 2006, North American automakers used 905,000 ounces of platinum.

According to Derek Engelbrecht of Impala Platinum Holdings, “the agony will continue in 2010″, if platinum miners in South Africa, who account for almost 80% of the world’s platinum supply, do not cut production. Without it platinum will, at best, stay at equilibrium or continue to decline.

2009-2010 will be the year of platinum jewelry as a direct result of decreased platinum jewelry prices. Perhaps now is the time to trade in your gold coins and buy that high-end platinum and 18k gold wedding band!

Platinum Prices Tied to the Big 3 Automakers?

Platinum fell below $800 an ounce on Thursday–a welcome sight for most in the fine jewelry industry, who consequently are able to lower platinum jewelry prices in hopes of motivating consumers to purchase such items as platinum wedding bands.

Platinum has exhibited nothing short of a bona fide crash in 2008, with platinum precious metal prices down 65% since its monumental peak of approx. $2,300 in March 2008. Platinum, today, hovers near $795 per ounce.

As a second generation jeweler and CEO of Apples of Gold Jewelry, I have been trying to fathom the mechanics of platinum’s elephantine decline. To the evident chagrin of precious metals investors, I have been outwardly gleeful to be able for the first time in six months to actually lower prices on jewelry, rather than raise them. Our goal, after all, at Apples of Gold, is to adhere to our value-based pricing philosophy which has helped boost jewelry sales in past years.

One recent timely factor of platinum’s fall from primordial heights: worries that trouble for American automakers will cut demand for platinum which is used in catalytic converters (motor vehicle pollution control devices). The economy, as we know, is intricately weaved in all of its multi-chromatic facets. Platinum prices fell, however, much earlier than the CEOs of the “Big 3″ flew their G4 private jets to Washington in the most surreal moment of 2008.

The biggest factor: Crude oil prices, a commodity that is economically and intricately tied to precious metals. Oil prices have declined 70% for the year since oil’s otherworldly 52 week high of $145 per barrel.  Oil hit a 5 year low today, closing at $43.67 per barrel, a low not seen since 2003. It’s noteworthy that gas prices have not yet fallen 70% since–but they have made large strides in the right direction.

A marginally rising U.S. dollar and falling oil prices are major contributors to falling precious metals, including gold, platinum, and palladium. The U.S. dollar is up approx. 18% vs. the Euro this year–all of which is contributing to precious metals’ decline (historically precious metals are inversely tied to the U.S. dollar as a hedge against inflation and instability in world markets).

Another major factor for platinum’s fall-out and perhaps the one that makes the most sense? Q1-Q2 platinum prices were simply too inflated at $2,300 per ounce and could not sustain long term jewelry demand. Platinum was far too expensive and out of the reach of most consumers. Although still a “metal for the masses”, platinum has become more attainable.

Personally, I feel much more comfortable with platinum prices in the $700 range. The lower the cost of raw materials, the lower jewelers are able to market their finished, designer jewelry pieces. With the economy in an untenable ball of fear, lower prices are a refreshing and welcome sight in the jewelry industry.

Apples of Gold has recently lowered prices on all of its platinum jewelry. And we hope this trend will continue.

Gold Prices Going Up!

For the first time in some weeks, the prices of gold have started to rise.  It happened on Friday, after a week of miserable financial news and word that deflation was on the way as fuel prices fall, food and retail prices fall, and inflation backs off.  But gold comes to the rescue of investors, edging forward slightly as the dollar weakens.

This is interesting news after months of dismal prospects for miners and mining companies.

I spoke with a foreman who works for a mining company while I was at a family event this weekend.  He gave me the “sad news that 1000 people were laid off by our company on Friday.  We’re just not doing the work because we don’t have the customers right now.”  His company mines everything from sand to salt with minerals and precious metals in between.  So this latest news is good for those companies; their workers and those workers’ families.

Shares of the world’s largest gold mining companies jumped on higher gold prices Friday as investors shifted into precious metals and demand for the product continued to build.

Barrick Gold Corporation, the world’s largest gold producer, along with Newmont Mining Corp., the second largest, and other mining firms posted double-digit gains by late afternoon. The price of gold for future delivery jumped above $800 an ounce – up $52.90 to $801.60 by Friday afternoon on the New York Mercantile Exchange.

The renewed interest comes as investors seek safer investments amid volatility on Wall Street. “There’s been a tremendous amount of pressure on gold in recent weeks because as there’s been a lot of liquidity selling,” Barnard Jacobs Mellet analyst Patrick Chidley said in a telephone interview.

“It’s this battle between sellers trying to find liquidity and raise cash and the long-term fundamentals which are for higher gold prices as a result of a weaker dollar,” he said.

Now here’s the key part for us here at ApplesofGold.com: although we hope for a reasonably lengthy delay in rising jewelry prices, the lower gold prices have boosted demand among jewelry manufacturers and investors, according to Chidley.  This means that prices, which have been sitting idly while the economy appeared to weaken, may be going up.

Holiday prices are expected to remain low, and some say “big sales” and “huge markdown” will be the bywords this holiday season.  But after that, with gold prices going up, expect jewelry prices may start to launch upwards, too. So let the buyer beware: now is the time to shop.

Platinum Wedding Band Prices Down Sharply

With platinum prices down significantly this year, it is the perfect time to buy that platinum wedding band you’ve been eyeing all year.

Apples of Gold Jewelry has lowered prices recently on all of its platinum rings, including their line of plain platinum wedding bands, design platinum wedding bands, and Celtic platinum wedding bands.

Many jewelers have been hesitant to lower platinum prices due to the unusual amount of volatility in the precious metals markets, especially for metals like platinum which are historically more volatile than metals such as gold.

Platinum reached its high in March 2008 when it peaked at approx. $2,300 per ounce. As we approach the end of the year and the upcoming holidays, platinum sits unnoticed at approx. $800 per ounce–a staggering loss in the platinum markets.

This does not mean that platinum prices are now 1/3 of the price, but reputable jewelers should now begin to lower their prices on platinum. Since platinum is a nearly pure metal with platinum jewelry mostly being 950 grade (95% pure platinum), it will always cost more than its gold counterpart (which is often 58% pure such as in 14k gold vs. platinum’s 95% purity). Other cost factors include higher manufacturing and labor costs for platinum jewelry, as well as lower demand compared to other precious metals such as gold.

Still, you should now begin to see platinum jewelry prices falling approx. 25% or more, if the jewelry industry takes note of a vastly changing market.

Platinum wedding bands, now slightly more affordable than before, remain an excellent choice for longevity, low maintenance, and for their hypoallergenic properties.

Visit Apples of Gold Jewelry to view their unique and affordable line of platinum wedding rings.

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.”