Most people think of gold as money. It is true that this precious metal has been valued throughout recorded history as a way to measure wealth whether in coins or jewelry. To this day, gold remains an investable asset/commodity in high demand.
Demand for this metal may be attributed to more than its value as currency and a medium of exchange. Its beauty and its malleable nature have also added to its value. The ability to pound it into paper-thin sheets that can mold around objects without cracking, has made it popular for adding a brilliant, reflective finish to art objects for millennia. Many of the famous statues of ancient Greece and Rome were once covered with gold leaf.
Gold is also found in ores (Quartz and sulfide minerals deposits) extracted by crushing rocks in which microscopic particles of gold are trapped. Fool's Gold, or pyrite is also a potential source of small quanties of gold.
Scientists found that Gold has an atomic weight of 79, hence its position as the 79th chemical element in the periodic table. The abbreviation, Au, used in the table to designate gold comes from the Latin word aurum, meaning "shining dawn."
Gold is known as a transition metal because the metals surrounding it on the periodic table either have more or fewer d atomic orbitals, gold is the least chemically reactive metal on the planet. The only solution that will etch it is a solution of nitric and hydrochloric acid. These acids separately do not harm the metal.
The discovery of gold predates recorded history. One of the earliest mentions of gold as currency dates to about 3100 B.C., where the value of gold is compared to the value of silver. Gold was worth 2-1/2 times silver. A map dating to 1320 B.C. purports to be a road map to both gold mines and miners' quarters in a series of mountains.
The first use of gold in coins appeared around 700 B.C. The merchants of Lydia melted lumps containing 63% gold and 27% silver and stamped them. "Rich as Croesus" is an expression still heard today. It reflects how wealthy Lydia's last king was.
Jason's Golden Fleece probably refers to the use by the Greeks of a sheep skin to trap fine placer gold in a stream after soils suspected to be rich in gold deposits were washed into the steam. Sand would wash away, while the heavier gold would adhere to the fleece. The gold-laden fleece would then be hung up to dry, the gold beaten out of it, then combined. This is the earliest type of hydraulic-placer mining recorded.
Its use continued up into the early 1900s, devastating large areas in California's Sierra Nevada and Klamath-Trinity Mountains and leaving behind a serious issue with mercury contamination in the rivers draining out of these mountains. Interestingly enough, mercury is the next element on the periodic table and the only element able to dissolve gold.
Gold is found worldwide, including in the ocean. It is estimated that up to 15,000 tons of gold dust is dispersed in our oceans. The gold found in hard rock mines is much easier to extract, even though it is invisible to the naked eye. As long as the ore extracted contains at least 0.05 mg of gold per kg of ore [or X oz per Ton], at current prices a mine can remain financially viable.
South Africa has supplied 82,500 tonnes of gold since gold was discovered in the Witwatersrand in 1886 almost 50% of all the gold every produced in the world, as of 2009. In 1970 alone, it produced 79% of the world supply. When China's production surpassed South Africa's in 2007, it was the first time since 1905 that South Africa wasn't the largest producer of gold. The United States, Australia, Russia and Peru are also major producers.
While you will still find hobby gold panners today, generally gold is mined. Gold ore may be collected from open-pit mines or underground, hard rock mines. As of 2007, it cost an average US$317/oz. to mine and extract gold.
Gold's use as currency is well documented. For years, most governments backed the value of their fiat (paper) currency with actual gold bullion stores. Gold has also been used for personal adornment from prehistoric times. Not only has it been used to create jewelry, gold leaf has been used to embellish furniture, statuary, and other art objects.
During the industrial revolution, gold's chemical properties came to the fore. Cranberry glass with its rich red coloring became extremely popular in Victorian England. The source of the color was amazingly the addition of gold chloride, a gold salt. Production remains limited to small studios as the process cannot be replicated on a large scale.
Gold chloride also came into use in photography as a way to shift black and white prints toward blue and white or brown and white prints. When used on sepia-toned prints, the gold shifted the colors into the red spectrum.
In the space age, gold has come into use as a reflective material. It reflects electromagnetic radiation and radio waves, making it the best choice for coating satellites and space suits. Gold is also used in high-end CDs to create the reflective layer which the laser reads.
Because gold can be rolled so thin that it becomes transparent, it is see on some aircraft cockpit windows. By passing an electric current through the gold layer, just enough heat is produced to prevent ice buildup.
Gold is highly conductive. When superior electrical conductivity with minimal corrosion risk is needed, it is the metal of choice. This is why it is seen on high-end USB, audio and video cables. Gold is used in electrical contacts or wherever semiconductors are used. It is in used on computer motherboards and on the contacts in memory chips.
Gold continues to be in demand as a source of financial security. Investors either choose to buy stocks in the companies that mine gold, or purchase gold ingots or bullion.
Because gold is in demand not only for financial security but for many industry applications, it remains one of the most valuable metals on the market. Only platinum typically has a higher price in the commodities market. Despite the fact that no country in the world currently connects its currency to gold, it still retains tangible value.
On the stock market, gold has gone as high as $1375USD. Gold prices have been climbing steadily since 2001, when prices were around $256USD. The climb has been relatively steady, with occasional spikes.
There are three ways to invest in gold that are generally recognized as having a lower risk for investors who need to keep their investment risk controlled. Purchase the metal for yourself, purchase gold exchange-traded or gold mutual funds, or purchase gold mining stock. Purchasing coins such as South African Krugerrands, Canadian Maple Leafs or American Eagles allow you to stockpile gold. With this investment method, it is vital that you find a safe place to store your gold.
Gold exchange traded funds (ETFs) are special mutual funds that trade on the stock exchange just like ordinary stock, but they hold gold bullion as their only asset. There are two ETFs in the US, streetTRACKS Gold Trust (GLD) and iShares COMEX Gold Trust (IAU). Either stock will add the value of gold to your investment portfolio. Gold mutual funds hold portfolios of gold mining stocks that are well-capitalized and established. This is the best way to invest in gold if you don't wish to manage your own portfolio. However, if you would like to gain more control over your investments, you can also invest independently in gold mining stock. When doing so, it is important to look at the track record of the gold mine. Newer mines may not have been productive for long enough to demonstrate the ability to provide a profitable return and older mines may be waning in productivity.
The demand for Gold has seen a drop over the last year due to falling sales in jewelry. At the same time, because of its historical use as hard currency, gold is expected to continue to hold its value even as other currencies devalue. Some forecasters predict that a severe gold shortage is coming. They point to the increased expense of extracting gold from deep mines and South Africa's falling production over the last three years.
The fact that the U.S. Mint has run out of 1-oz. blanks for its production of American Eagle Gold Coins twice recently is also another hint that there isn't enough gold to go around. Demand is so high for the coins that there are individuals willing to pay $1700US for the 1-oz. coins.
Gold will continue to be in demand in the electronic industry as well. While there is some indication that China will be able to sustain its own demand for gold, other developing countries such as India have no internal reserves. As these countries become increasingly industrialized, demand will continue to rise.
The following list of mining companies and the stock exchanges they are traded on is the beginning of entering the world of gold mine investments. This list has been narrowed down to companies that mine gold, though they may also mine other metals as well.
» Fool's Gold may actually contain microscopic bits of gold in it.
» Gold's resistance to most acids, alkalis and oxidative corrosion has contributed to its use in many applications.
» Gold's superior conductivity and ability to be rolled so thin it can be seen through has led to its use in de-icing windshields on aircraft.
» Gold's use for coins goes back to 700 B.C. Prior to this gold was weighed and measured in talents.
» White gold is actually a gold alloy in which a white metal such as nickel is added to the gold to give it a more silvery cast. A layer of rhodium is added to enhance the white appearance.
» As gold dust is washed into streams, the constant action of the water helps the grains to come together. Gold nuggets form as these grains of gold stick together.
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