Gold

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This article is about the metal. For the color, see Gold (color). For other uses, see Gold (disambiguation).

platinum ← gold → mercury Ag ↑ Au ↓ Rg 79Au Periodic table
Appearance
metallic yellow
General properties
Name, symbol, number	gold, Au, 79
Pronunciation	/ˈɡoʊld/
Element category	transition metal
Group, period, block	11, 6, d
Standard atomic weight	196.966569g·mol−1
Electron configuration	[Xe] 4f14 5d10 6s1
Electrons per shell	2, 8, 18, 32, 18, 1 (Image)
Physical properties
Phase	solid
Density (near r.t.)	19.30 g·cm−3
Liquid density at m.p.	17.31 g·cm−3
Melting point	1337.33 K, 1064.18 °C, 1947.52 °F
Boiling point	3129 K, 2856 °C, 5173 °F
Heat of fusion	12.55 kJ·mol−1
Heat of vaporization	324 kJ·mol−1
Specific heat capacity	(25 °C) 25.418 J·mol−1·K−1
Vapor pressure
P (Pa) 1 10 100 1 k 10 k 100 k at T (K) 1646 1814 2021 2281 2620 3078
Atomic properties
Oxidation states	-1, 1, 2, 3, 4, 5 (amphoteric oxide)
Electronegativity	2.54 (Pauling scale)
Ionization energies	1st: 890.1 kJ·mol−1
	2nd: 1980 kJ·mol−1
Atomic radius	144 pm
Covalent radius	136±6 pm
Van der Waals radius	166 pm
Miscellanea
Crystal structure	Lattice face centered cubic
Magnetic ordering	diamagnetic
Electrical resistivity	(20 °C) 22.14 nΩ·m
Thermal conductivity	(300 K) 318 W·m−1·K−1
Thermal expansion	(25 °C) 14.2 µm·m−1·K−1
Speed of sound (thin rod)	(r.t.) 2030 m·s−1
Tensile strength	120 MPa
Young's modulus	79 GPa
Shear modulus	27 GPa
Bulk modulus	180 GPa
Poisson ratio	0.44
Mohs hardness	2.5
Vickers hardness	216 MPa
Brinell hardness	25 HB MPa
CAS registry number	7440-57-5
Most stable isotopes
Main article: Isotopes of gold
iso NA half-life DM DE (MeV) DP 195Au syn 186.10 d ε 0.227 195Pt 196Au syn 6.183 d ε 1.506 196Pt β− 0.686 196Hg 197Au 100% 197Au is stable with 118 neutrons 198Au syn 2.69517 d β− 1.372 198Hg 199Au syn 3.169 d β− 0.453 199Hg
v · d · e

Gold ( /ˈɡoʊld/) is a chemical element with the symbol Au (from Latin: aurum "gold") and an atomic number of 79. Gold is a dense, soft, shiny metal and the most malleable and ductile metal known. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a transition metal and a group 11 element. With exception of the noble gases, gold is the least reactive chemical element known. It has been a valuable and highly sought-after precious metal for coinage, jewelry, and other arts since long before the beginning of recorded history.

Gold resists attacks by individual acids, but it can be dissolved by the aqua regia, so named because it dissolves gold. Gold also dissolves in alkaline solutions of cyanide, which have been used in mining. Gold dissolves in mercury, forming amalgam alloys. Gold is insoluble in nitric acid, which dissolves silver and base metals, a property that has long been used to confirm the presence of gold in items.

The native metal occurs as nuggets or grains in rocks, in veins and in alluvial deposits. Less commonly, it occurs in minerals as gold compounds, usually with tellurium. Gold standards have been the most common basis for monetary policies throughout human history, being widely supplanted by fiat currency only in the late 20th century. Gold has also been frequently linked to a wide variety of symbolisms and ideologies. A total of 165,000 tonnes of gold have been mined in human history, as of 2009.^[1] This is roughly equivalent to 5.3 billion troy ounces or, in terms of volume, about 8500 m³, or a cube 20.4 m on a side. The world consumption of new gold produced is about 50% in jewelry, 40% in investments, and 10% in industry.^[2]

Besides its widespread monetary and symbolic functions, gold has many practical uses in dentistry, electronics, and other fields. Its high malleability, ductility, resistance to corrosion and most other chemical reactions, and conductivity of electricity lead to many uses of gold, including electric wiring, colored glass production and even gold leaf eating.

Contents [hide] 1 Characteristics 1.1 Color 1.2 Isotopes 2 Use and applications 2.1 Monetary exchange 2.2 Investment 2.3 Jewelry 2.4 Medicine 2.5 Food and drink 2.6 Industry 2.7 Electronics 2.8 Commercial chemistry 3 History 4 Occurrence 4.1 Gallery of specimens of crystalline native gold 5 Production 6 Consumption 7 Chemistry 7.1 Less common oxidation states 7.2 Mixed valence compounds 8 Toxicity 9 Price 10 Symbolism 11 State emblem 12 See also 13 References 14 External links

Characteristics

Gold is the most malleable and ductile of all metals; a single gram can be beaten into a sheet of 1 square meter, or an ounce into 300 square feet. Gold leaf can be beaten thin enough to become translucent. The transmitted light appears greenish blue, because gold strongly reflects yellow and red.^[3] Such semi-transparent sheets also strongly reflect infrared light, making them useful as infrared (radiant heat) shields in visors of heat-resistant suits, and in sun-visors for spacesuits.^[4]

Gold readily creates alloys with many other metals. These alloys can be produced to modify the hardness and other metallurgical properties, to control melting point or to create exotic colors (see below).^[5] Gold is a good conductor of heat and electricity and reflects infrared radiation strongly. Chemically, it is unaffected by air, moisture and most corrosive reagents, and is therefore well suited for use in coins and jewelry and as a protective coating on other, more reactive, metals. However, it is not chemically inert.

Common oxidation states of gold include +1 (gold(I) or aurous compounds) and +3 (gold(III) or auric compounds). Gold ions in solution are readily reduced and precipitated out as gold metal by adding any other metal as the reducing agent. The added metal is oxidized and dissolves allowing the gold to be displaced from solution and be recovered as a solid precipitate.

High quality pure metallic gold is tasteless and scentless, in keeping with its resistance to corrosion (it is metal ions which confer taste to metals).^[6]

In addition, gold is very dense, a cubic meter weighing 19,300 kg. By comparison, the density of lead is 11,340 kg/m³, and that of the densest element, osmium, is 22,610 kg/m³.

Color

Different colors of Ag-Au-Cu alloys

Whereas most other pure metals are gray or silvery white, gold is yellow. This color is determined by the density of loosely bound (valence) electrons; those electrons oscillate as a collective "plasma" medium described in terms of a quasiparticle called plasmon. The frequency of these oscillations lies in the ultraviolet range for most metals, but it falls into the visible range for gold due to subtle relativistic effects that affect the orbitals around gold atoms.^[7][8] Similar effects impart a golden hue to metallic cesium (see relativistic quantum chemistry).

Common colored gold alloys such as rose gold can be created by the addition of various amounts of copper and silver, as indicated in the triangular diagram to the left. Alloys containing palladium or nickel are also important in commercial jewelry as these produce white gold alloys. Less commonly, addition of manganese, aluminium, iron, indium and other elements can produce more unusual colors of gold for various applications.^[5]

Isotopes

Main article: Isotopes of gold

Gold has only one stable isotope, ¹⁹⁷Au, which is also its only naturally occurring isotope. Thirty six radioisotopes have been synthesized ranging in atomic mass from 169 to 205. The most stable of these is ¹⁹⁵Au with a half-life of 186.1 days. The least stable is ¹⁷¹Au, which decays by proton emission with a half-life of 30 µs. Most of gold's radioisotopes with atomic masses below 197 decay by some combination of proton emission, α decay, and β+ decay. The exceptions are ¹⁹⁵Au, which decays by electron capture, and ¹⁹⁶Au, which decays most often by electron capture (93%) with a minor β- decay path (7%).^[9] All of gold's radioisotopes with atomic masses above 197 decay by β- decay.^[10]

At least 32 nuclear isomers have also been characterized, ranging in atomic mass from 170 to 200. Within that range, only ¹⁷⁸Au, ¹⁸⁰Au, ¹⁸¹Au, ¹⁸²Au, and ¹⁸⁸Au do not have isomers. Gold's most stable isomer is ^198m2Au with a half-life of 2.27 days. Gold's least stable isomer is ^{177 m2}Au with a half-life of only 7 ns. ^{184 m1}Au has three decay paths: β+ decay, isomeric transition, and alpha decay. No other isomer or isotope of gold has three decay paths.^[10]

Use and applications

Monetary exchange

Gold has been widely used throughout the world as a vehicle for monetary exchange, either by issuance and recognition of gold coins or other bare metal quantities, or through gold-convertible paper instruments by establishing gold standards in which the total value of issued money is represented in a store of gold reserves.

However, production has not grown in relation to the world's economies. Today, gold mining output is declining.^[11] With the sharp growth of economies in the 20th century, and increasing foreign exchange, the world's gold reserves and their trading market have become a small fraction of all markets and fixed exchange rates of currencies to gold were no longer sustained. At the beginning of World War I the warring nations moved to a fractional gold standard, inflating their currencies to finance the war effort. After World War II gold was replaced by a system of convertible currency following the Bretton Woods system. Gold standards and the direct convertibility of currencies to gold have been abandoned by world governments, being replaced by fiat currency in their stead. Switzerland was the last country to tie its currency to gold; it backed 40% of its value until the Swiss joined the International Monetary Fund in 1999.^{[citation needed]}

Pure gold is too soft for day-to-day monetary use and is typically hardened by alloying with copper, silver or other base metals. The gold content of alloys is measured in carats (k). Pure gold is designated as 24k. English gold coins intended for circulation from 1526 into the 1930s were typically a standard 22k alloy called crown gold, for hardness (American gold coins for circulation after 1837 contained the slightly lower amount of 0.900 fine gold, or 21.6 kt).

Investment

Main article: Gold as an investment

Many holders of gold store it in form of bullion coins or bars as a hedge against inflation or other economic disruptions. However, some economists do not believe gold serves as a hedge against inflation or currency depreciation.^[12]

The ISO 4217 currency code of gold is XAU.

Modern bullion coins for investment or collector purposes do not require good mechanical wear properties; they are typically fine gold at 24k, although the American Gold Eagle, the British gold sovereign, and the South African Krugerrand continue to be minted in 22k metal in historical tradition. The special issue Canadian Gold Maple Leaf coin contains the highest purity gold of any bullion coin, at 99.999% or 0.99999, while the popular issue Canadian Gold Maple Leaf coin has a purity of 99.99%. Several other 99.99% pure gold coins are available. In 2006, the United States Mint began production of the American Buffalo gold bullion coin with a purity of 99.99%. The Australian Gold Kangaroos were first coined in 1986 as the Australian Gold Nugget but changed the reverse design in 1989. Other popular modern coins include the Austrian Vienna Philharmonic bullion coin and the Chinese Gold Panda.

Jewelry

Main article: Jewellery

Moche gold necklace depicting feline heads. Larco Museum Collection. Lima-Peru

Because of the softness of pure (24k) gold, it is usually alloyed with base metals for use in jewelry, altering its hardness and ductility, melting point, color and other properties. Alloys with lower caratage, typically 22k, 18k, 14k or 10k, contain higher percentages of copper, or other base metals or silver or palladium in the alloy. Copper is the most commonly used base metal, yielding a redder color. Eighteen-carat gold containing 25% copper is found in antique and Russian jewelry and has a distinct, though not dominant, copper cast, creating rose gold. Fourteen-carat gold-copper alloy is nearly identical in color to certain bronze alloys, and both may be used to produce police and other badges. Blue gold can be made by alloying with iron and purple gold can be made by alloying with aluminium, although rarely done except in specialized jewelry. Blue gold is more brittle and therefore more difficult to work with when making jewelry. Fourteen and eighteen carat gold alloys with silver alone appear greenish-yellow and are referred to as green gold. White gold alloys can be made with palladium or nickel. White 18-carat gold containing 17.3% nickel, 5.5% zinc and 2.2% copper is silvery in appearance. Nickel is toxic, however, and its release from nickel white gold is controlled by legislation in Europe. Alternative white gold alloys are available based on palladium, silver and other white metals,^[13] but the palladium alloys are more expensive than those using nickel. High-carat white gold alloys are far more resistant to corrosion than are either pure silver or sterling silver. The Japanese craft of Mokume-gane exploits the color contrasts between laminated colored gold alloys to produce decorative wood-grain effects.

Medicine

In medieval times, gold was often seen as beneficial for the health, in the belief that something that rare and beautiful could not be anything but healthy. Even some modern esotericists and forms of alternative medicine assign metallic gold a healing power.^[14] Some gold salts do have anti-inflammatory properties and are used as pharmaceuticals in the treatment of arthritis and other similar conditions.^[15] However, only salts and radioisotopes of gold are of pharmacological value, as elemental (metallic) gold is inert to all chemicals it encounters inside the body. In modern times, injectable gold has been proven to help to reduce the pain and swelling of rheumatoid arthritis and tuberculosis.^[15][16]

Gold alloys are used in restorative dentistry, especially in tooth restorations, such as crowns and permanent bridges. The gold alloys' slight malleability facilitates the creation of a superior molar mating surface with other teeth and produces results that are generally more satisfactory than those produced by the creation of porcelain crowns. The use of gold crowns in more prominent teeth such as incisors is favored in some cultures and discouraged in others.

Colloidal gold preparations (suspensions of gold nanoparticles) in water are intensely red-colored, and can be made with tightly controlled particle sizes up to a few tens of nanometers across by reduction of gold chloride with citrate or ascorbate ions. Colloidal gold is used in research applications in medicine, biology and materials science. The technique of immunogold labeling exploits the ability of the gold particles to adsorb protein molecules onto their surfaces. Colloidal gold particles coated with specific antibodies can be used as probes for the presence and position of antigens on the surfaces of cells.^[17] In ultrathin sections of tissues viewed by electron microscopy, the immunogold labels appear as extremely dense round spots at the position of the antigen.^[18] Colloidal gold is also the form of gold used as gold paint on ceramics prior to firing.

Gold, or alloys of gold and palladium, are applied as conductive coating to biological specimens and other non-conducting materials such as plastics and glass to be viewed in a scanning electron microscope. The coating, which is usually applied by sputtering with an argon plasma, has a triple role in this application. Gold's very high electrical conductivity drains electrical charge to earth, and its very high density provides stopping power for electrons in the electron beam, helping to limit the depth to which the electron beam penetrates the specimen. This improves definition of the position and topography of the specimen surface and increases the spatial resolution of the image. Gold also produces a high output of secondary electrons when irradiated by an electron beam, and these low-energy electrons are the most commonly used signal source used in the scanning electron microscope.^[19]

The isotope gold-198, (half-life 2.7 days) is used in some cancer treatments and for treating other diseases.^[20]

Food and drink

• Gold can be used in food and has the E number 175.^[21]
• Gold leaf, flake or dust is used on and in some gourmet foods, notably sweets and drinks as decorative ingredient.^[22] Gold flake was used by the nobility in Medieval Europe as a decoration in food and drinks, in the form of leaf, flakes or dust, either to demonstrate the host's wealth or in the belief that something that valuable and rare must be beneficial for one's health.
• Danziger Goldwasser (German: Gold water of Danzig) or Goldwasser (English: Goldwater) is a traditional German herbal liqueur^[23] produced in what is today Gdańsk, Poland, and Schwabach, Germany, and contains flakes of gold leaf. There are also some expensive (~$1000) cocktails which contain flakes of gold leaf.^[24] However, since metallic gold is inert to all body chemistry, it adds no taste nor has it any other nutritional effect and leaves the body unaltered.^[25]

Industry

The 220 kg gold brick displayed in Jinguashi Gold Museum, Taiwan, Republic of China.

The world's largest gold bar has a mass of 250 kg. Toi museum, Japan.

A gold nugget of 5 mm in diameter (bottom) can be expanded through hammering into a gold foil of about 0.5 square meter. Toi museum, Japan.

• Gold solder is used for joining the components of gold jewelry by high-temperature hard soldering or brazing. If the work is to be of hallmarking quality, gold solder must match the carat weight of the work, and alloy formulas are manufactured in most industry-standard carat weights to color match yellow and white gold. Gold solder is usually made in at least three melting-point ranges referred to as Easy, Medium and Hard. By using the hard, high-melting point solder first, followed by solders with progressively lower melting points, goldsmiths can assemble complex items with several separate soldered joints.
• Gold can be made into thread and used in embroidery.
• Gold is ductile and malleable, meaning it can be drawn into very thin wire and can be beaten into very thin sheets known as gold leaf.
• Gold produces a deep, intense red color when used as a coloring agent in cranberry glass.
• In photography, gold toners are used to shift the color of silver bromide black and white prints towards brown or blue tones, or to increase their stability. Used on sepia-toned prints, gold toners produce red tones. Kodak published formulas for several types of gold toners, which use gold as the chloride.^[26]
• As gold is a good reflector of electromagnetic radiation such as infrared and visible light as well as radio waves, it is used for the protective coatings on many artificial satellites, in infrared protective faceplates in thermal protection suits and astronauts' helmets and in electronic warfare planes like the EA-6B Prowler.
• Gold is used as the reflective layer on some high-end CDs.
• Automobiles may use gold for heat dissipation. McLaren uses gold foil in the engine compartment of its F1 model.^[27]
• Gold can be manufactured so thin that it appears transparent. It is used in some aircraft cockpit windows for de-icing or anti-icing by passing electricity through it. The heat produced by the resistance of the gold is enough to deter ice from forming.^[28]

Electronics

The concentration of free electrons in gold metal is 5.90×10²² cm⁻³. Gold is highly conductive to electricity, and has been used for electrical wiring in some high-energy applications (only silver and copper are more conductive per volume, but gold has the advantage of corrosion resistance). For example, gold electrical wires were used during some of the Manhattan Project's atomic experiments, but large high current silver wires were used in the calutron isotope separator magnets in the project.

Though gold is attacked by free chlorine, its good conductivity and general resistance to oxidation and corrosion in other environments (including resistance to non-chlorinated acids) has led to its widespread industrial use in the electronic era as a thin layer coating electrical connectors of all kinds, thereby ensuring good connection. For example, gold is used in the connectors of the more expensive electronics cables, such as audio, video and USB cables. The benefit of using gold over other connector metals such as tin in these applications is highly debated. Gold connectors are often criticized by audio-visual experts as unnecessary for most consumers and seen as simply a marketing ploy. However, the use of gold in other applications in electronic sliding contacts in highly humid or corrosive atmospheres, and in use for contacts with a very high failure cost (certain computers, communications equipment, spacecraft, jet aircraft engines) remains very common.^[29]

Besides sliding electrical contacts, gold is also used in electrical contacts because of its resistance to corrosion, electrical conductivity, ductility and lack of toxicity.^[30] Switch contacts are generally subjected to more intense corrosion stress than are sliding contacts. Fine gold wires are used to connect semiconductor devices to their packages through a process known as wire bonding.

Commercial chemistry

Gold is attacked by and dissolves in alkaline solutions of potassium or sodium cyanide, to form the salt gold cyanide—a technique that has been used in extracting metallic gold from ores in the cyanide process. Gold cyanide is the electrolyte used in commercial electroplating of gold onto base metals and electroforming.

Gold chloride (chloroauric acid) solutions are used to make colloidal gold by reduction with citrate or ascorbate ions. Gold chloride and gold oxide are used to make highly valued cranberry or red-colored glass, which, like colloidal gold suspensions, contains evenly sized spherical gold nanoparticles.^[31]

History

The Turin Papyrus Map.

Funerary mask of Tutankhamun.

Jason returns with the golden fleece on an Apulian red-figure calyx krater, ca. 340–330 BC.

Gold has been known and used by artisans since the Chalcolithic. Gold artifacts in the Balkans appear from the 4th millennium BC, such as that found in the Varna Necropolis. Gold artifacts such as the golden hats and the Nebra disk appeared in Central Europe from the 2nd millennium BC Bronze Age.

Egyptian hieroglyphs from as early as 2600 BC describe gold, which king Tushratta of the Mitanni claimed was "more plentiful than dirt" in Egypt.^[32] Egypt and especially Nubia had the resources to make them major gold-producing areas for much of history. The earliest known map is known as the Turin Papyrus Map and shows the plan of a gold mine in Nubia together with indications of the local geology. The primitive working methods are described by both Strabo and Diodorus Siculus, and included fire-setting. Large mines were also present across the Red Sea in what is now Saudi Arabia.

The legend of the golden fleece may refer to the use of fleeces to trap gold dust from placer deposits in the ancient world. Gold is mentioned frequently in the Old Testament, starting with Genesis 2:11 (at Havilah) and is included with the gifts of the magi in the first chapters of Matthew New Testament. The Book of Revelation 21:21 describes the city of New Jerusalem as having streets "made of pure gold, clear as crystal". The south-east corner of the Black Sea was famed for its gold. Exploitation is said to date from the time of Midas, and this gold was important in the establishment of what is probably the world's earliest coinage in Lydia around 610 BC.^[33] From the 6th or 5th century BC, the Chu (state) circulated the Ying Yuan, one kind of square gold coin.

In Roman metallurgy, new methods for extracting gold on a large scale were developed by introducing hydraulic mining methods, especially in Hispania from 25 BC onwards and in Dacia from 106 AD onwards. One of their largest mines was at Las Medulas in León (Spain), where seven long aqueducts enabled them to sluice most of a large alluvial deposit. The mines at Roşia Montană in Transylvania were also very large, and until very recently, still mined by opencast methods. They also exploited smaller deposits in Britain, such as placer and hard-rock deposits at Dolaucothi. The various methods they used are well described by Pliny the Elder in his encyclopedia Naturalis Historia written towards the end of the first century AD.

The Mali Empire in Africa was famed throughout the old world for its large amounts of gold. Mansa Musa, ruler of the empire (1312–1337) became famous throughout the old world for his great hajj to Mecca in 1324. When he passed through Cairo in July 1324, he was reportedly accompanied by a camel train that included thousands of people and nearly a hundred camels. He gave away so much gold that it depressed the price in Egypt for over a decade.^[34] A contemporary Arab historian remarked:

Gold was at a high price in Egypt until they came in that year. The mithqal did not go below 25 dirhams and was generally above, but from that time its value fell and it cheapened in price and has remained cheap till now. The mithqal does not exceed 22 dirhams or less. This has been the state of affairs for about twelve years until this day by reason of the large amount of gold which they brought into Egypt and spent there [...]

—Chihab Al-Umari^[35]

The European exploration of the Americas was fueled in no small part by reports of the gold ornaments displayed in great profusion by Native American peoples, especially in Central America, Peru, Ecuador and Colombia. The Aztecs regarded gold as literally the product of the gods, calling it "god excrement" (teocuitlatl in Nahuatl).^[36] However, for the indigenous peoples of North America, gold was considered useless, and they saw much greater value in other minerals, which were directly related to their utility, such as obsidian, flint, and slate.^[37]

Although the price of some platinum group metals can be much higher, gold has long been considered the most desirable of precious metals, and its value has been used as the standard for many currencies (known as the gold standard) in history. Gold has been used as a symbol for purity, value, royalty, and particularly roles that combine these properties. Gold as a sign of wealth and prestige was ridiculed by Thomas More in his treatise Utopia. On that imaginary island, gold is so abundant that it is used to make chains for slaves, tableware and lavatory-seats. When ambassadors from other countries arrive, dressed in ostentatious gold jewels and badges, the Utopians mistake them for menial servants, paying homage instead to the most modestly dressed of their party.

There is an age-old tradition of biting gold to test its authenticity. Although this is certainly not a professional way of examining gold, the bite test should score the gold because gold is a soft metal, as indicated by its score on the Mohs' scale of mineral hardness. The purer the gold the easier it should be to mark it. Painted lead can cheat this test because lead is softer than gold (and may invite a small risk of lead poisoning if sufficient lead is absorbed by the biting).

Gold in antiquity was relatively easy to obtain geologically; however, 75% of all gold ever produced has been extracted since 1910.^[38] It has been estimated that all gold ever refined would form a single cube 20 m (66 ft) on a side (equivalent to 8,000 m³).^[38]

One main goal of the alchemists was to produce gold from other substances, such as lead — presumably by the interaction with a mythical substance called the philosopher's stone. Although they never succeeded in this attempt, the alchemists promoted an interest in what can be done with substances, and this laid a foundation for today's chemistry. Their symbol for gold was the circle with a point at its center (☉), which was also the astrological symbol and the ancient Chinese character for the Sun. For modern creation of artificial gold by neutron capture, see gold synthesis.

During the 19th century, gold rushes occurred whenever large gold deposits were discovered. The first documented discovery of gold in the United States was at the Reed Gold Mine near Georgeville, North Carolina in 1803.^[39] The first major gold strike in the United States occurred in a small north Georgia town called Dahlonega.^[40] Further gold rushes occurred in California, Colorado, the Black Hills, Otago in New Zealand, Australia, Witwatersrand in South Africa, and the Klondike in Canada.

Because of its historically high value, much of the gold mined throughout history is still in circulation in one form or another.

Occurrence

This 156-ounce (4.85 kg) nugget was found by an individual prospector in the Southern California Desert using a metal detector.

Gold's atomic number of 79 makes it one of the higher atomic number elements which occur naturally. Like all elements with atomic numbers larger than iron, gold is thought to have been formed from a supernova nucleosynthesis process. Their explosions scattered metal-containing dusts (including heavy elements like gold) into the region of space in which they later condensed into our solar system and the Earth.^[41]

On Earth, whenever elemental gold occurs, it appears most often as a metal solid solution of gold with silver, i.e. a gold silver alloy. Such alloys usually have a silver content of 8–10%. Electrum is elemental gold with more than 20% silver. Electrum's color runs from golden-silvery to silvery, dependent upon the silver content. The more silver, the lower the specific gravity.

Relative sizes of an 860 kg block of gold ore, and the 30 g of gold that can be extracted from it. Toi gold mine, Japan.

Gold left behind after a pyrite cube was oxidized to hematite. Note cubic shape of cavity.

Gold is found in ores made up of rock with very small or microscopic particles of gold. This gold ore is often found together with quartz or sulfide minerals such as Fool's Gold, which is a pyrite.^[42] These are called lode deposits. Native gold is also found in the form of free flakes, grains or larger nuggets that have been eroded from rocks and end up in alluvial deposits (called placer deposits). Such free gold is always richer at the surface of gold-bearing veins owing to the oxidation of accompanying minerals followed by weathering, and washing of the dust into streams and rivers, where it collects and can be welded by water action to form nuggets.

Gold sometimes occurs combined with tellurium as the minerals calaverite, krennerite, nagyagite, petzite and sylvanite, and as the rare bismuthide maldonite (Au₂Bi) and antimonide aurostibite (AuSb₂). Gold also occurs in rare alloys with copper, lead, and mercury: the minerals auricupride (Cu₃Au), novodneprite (AuPb₃) and weishanite ((Au, Ag)₃Hg₂).

Recent research suggests that microbes can sometimes play an important role in forming gold deposits, transporting and precipitating gold to form grains and nuggets that collect in alluvial deposits.^[43]

The world's oceans contain gold. Measured concentrations of gold in the Atlantic and Northeast Pacific are 50–150 fmol/L or 10–30 parts per quadrillion (about 10–30 g/km³). In general, Au concentrations for Atlantic and Pacific samples are the same (~50 fmol/L) but less certain. Mediterranean deep waters contain higher concentrations of Au (100–150 fmol/L) attributed to wind-blown dust and/or rivers. At 10 parts per quadrillion the Earth's oceans would hold 15,000 tons of gold.^[44] These figures are three orders of magnitude less than reported in the literature prior to 1988, indicating contamination problems with the earlier data.

A number of people have claimed to be able to economically recover gold from sea water, but so far they have all been either mistaken or crooks. A so-called reverend, Prescott Jernegan ran a gold-from-seawater swindle in the United States in the 1890s. A British fraudster ran the same scam in England in the early 1900s.^[45] Fritz Haber (the German inventor of the Haber process) did research on the extraction of gold from sea water in an effort to help pay Germany's reparations following World War I.^[46] Based on the published values of 2 to 64 ppb of gold in seawater a commercially successful extraction seemed possible. After analysis of 4,000 water samples yielding an average of 0.004 ppb it became clear that the extraction would not be possible and he stopped the project.^[47] No commercially viable mechanism for performing gold extraction from sea water has yet been identified. Gold synthesis is not economically viable and is unlikely to become so in the foreseeable future.

Gallery of specimens of crystalline native gold

• 

  Native gold nuggets

• 

  "Rope gold" from Lena River, Sakha Republic, Russia. Size: 2.5×1.2×0.7 cm.

• 

  Crystalline gold from Mina Zapata, Santa Elena de Uairen, Venezuela. Size: 3.7×1.1×0.4 cm.

• 

  Gold leaf from Harvard Mine, Jamestown, California, USA. Size 9.3×3.2× >0.1 cm.

Production

Main articles: Gold prospecting, Gold mining, Gold extraction, and List of countries by gold production

Gold output in 2005

The entrance to an underground gold mine in Victoria, Australia.

Pure gold precipitate produced by the aqua regia refining process

Gold extraction is most economical in large, easily mined deposits. Ore grades as little as 0.5 mg/kg (0.5 parts per million, ppm) can be economical. Typical ore grades in open-pit mines are 1–5 mg/kg (1–5 ppm); ore grades in underground or hard rock mines are usually at least 3 mg/kg (3 ppm). Because ore grades of 30 mg/kg (30 ppm) are usually needed before gold is visible to the naked eye, in most gold mines the gold is invisible.

Since the 1880s, South Africa has been the source for a large proportion of the world's gold supply, with about 50% of all gold ever produced having come from South Africa. Production in 1970 accounted for 79% of the world supply, producing about 1,480 tonnes. 2008 production was 2,260 tonnes. In 2007 China (with 276 tonnes) overtook South Africa as the world's largest gold producer, the first time since 1905 that South Africa has not been the largest.^[48]

The city of Johannesburg located in South Africa was founded as a result of the Witwatersrand Gold Rush which resulted in the discovery of some of the largest gold deposits the world has ever seen. Gold fields located within the basin in the Free State and Gauteng provinces are extensive in strike and dip requiring some of the world's deepest mines, with the Savuka and TauTona mines being currently the world's deepest gold mine at 3,777 m. The Second Boer War of 1899–1901 between the British Empire and the Afrikaner Boers was at least partly over the rights of miners and possession of the gold wealth in South Africa.

Other major producers are the United States, Australia, Russia and Peru. Mines in South Dakota and Nevada supply two-thirds of gold used in the United States. In South America, the controversial project Pascua Lama aims at exploitation of rich fields in the high mountains of Atacama Desert, at the border between Chile and Argentina. Today about one-quarter of the world gold output is estimated to originate from artisanal or small scale mining.^[49]

After initial production, gold is often subsequently refined industrially by the Wohlwill process which is based on electrolysis or by the Miller process, that is chlorination in the melt. The Wohlwill process results in higher purity, but is more complex and is only applied in small-scale installations.^[50][51] Other methods of assaying and purifying smaller amounts of gold include parting and inquartation as well as cupellation, or refining methods based on the dissolution of gold in aqua regia.^[52]

At the end of 2009, it was estimated that all the gold ever mined totaled 165,000 tonnes^[1] This can be represented by a cube with an edge length of about 20.28 meters. The value of this is very limited; at $1,200 per ounce, 165,000 tons of gold would have a value of only $6.6 trillion.

The average gold mining and extraction costs were about US$317/oz in 2007, but these can vary widely depending on mining type and ore quality; global mine production amounted to 2,471.1 tonnes.^[53]

Gold is so stable and so valuable that most of the gold used in manufactured goods, jewelry, and works of art is eventually recovered and recycled. Some gold used in spacecraft and electronic equipment cannot be profitably recovered, but it is generally used in these applications in the form of extremely thin layers or extremely fine wires so that the total quantity used (and lost) is small compared to the total amount of gold produced and stockpiled. Thus there is little true consumption of new gold in the economic sense; the stock of gold remains essentially constant (at least in the modern world) while ownership shifts from one party to another.^[54] One estimate is that 85% of all the gold ever mined is still available in the world's easily recoverable stocks, with 15% having been lost, or used in non-recyclable industrial uses.^[55]

Consumption

The consumption of gold produced in the world is about 50% in jewelry, 40% in investments, and 10% in industry.

India is the world's largest single consumer of gold, as Indians buy about 25% of the world's gold,^[56] purchasing approximately 800 tonnes of gold every year, mostly for jewelry. India is also the largest importer of gold; in 2008, India imported around 400 tonnes of gold.^[57]

Chemistry

Gold (III) chloride solution in water

Although gold is a noble metal, it forms many and diverse compounds. The oxidation state of gold in its compounds ranges from −1 to +5, but Au(I) and Au(III) dominate its chemistry. Au(I), referred to as the aurous ion, is the most common oxidation state with soft ligands such as thioethers, thiolates, and tertiary phosphines. Au(I) compounds are typically linear. A good example is Au(CN)₂⁻, which is the soluble form of gold encountered in mining. Curiously, aurous complexes of water are rare. The binary gold halides, such as AuCl, form zigzag polymeric chains, again featuring linear coordination at Au. Most drugs based on gold are Au(I) derivatives.^[58]

Au(III) (auric) is a common oxidation state, and is illustrated by gold(III) chloride, Au₂Cl₆. The gold atom centers in Au(III) complexes, like other d⁸ compounds, are typically square planar, with chemical bonds that have both covalent and ionic character.

Aqua regia, a 1:3 mixture of nitric acid and hydrochloric acid, dissolves gold. Nitric acid oxidizes the metal to +3 ions, but only in minute amounts, typically undetectable in the pure acid because of the chemical equilibrium of the reaction. However, the ions are removed from the equilibrium by hydrochloric acid, forming AuCl₄⁻ ions, or chloroauric acid, thereby enabling further oxidation.

Some free halogens react with gold.^[59] Gold also reacts in alkaline solutions of potassium cyanide. With mercury, it forms an amalgam.

Less common oxidation states

Less common oxidation states of gold include −1, +2, and +5.

The −1 oxidation state occurs in compounds containing the Au⁻ anion, called aurides. Caesium auride (CsAu), for example, crystallizes in the caesium chloride motif.^[60] Other aurides include those of Rb⁺, K⁺, and tetramethylammonium (CH₃)₄N⁺.^[61]

Gold(II) compounds are usually diamagnetic with Au–Au bonds such as [Au(CH₂)₂P(C₆H₅)₂]₂Cl₂. The evaporation of a solution of Au(OH)₃ in concentrated H₂SO₄ produces red crystals of gold(II) sulfate, AuSO₄. Originally thought to be a mixed-valence compound, it has been shown to contain Au4+
2 cations.^[62][63] A noteworthy, legitimate gold(II) complex is the tetraxenonogold(II) cation, which contains xenon as a ligand, found in [AuXe₄](Sb₂F₁₁)₂.^[64]

Gold pentafluoride and its derivative anion, AuF−
6, is the sole example of gold(V), the highest verified oxidation state.^[65]

Some gold compounds exhibit aurophilic bonding, which describes the tendency of gold ions to interact at distances that are too long to be a conventional Au–Au bond but shorter that van der Waals bonding. The interaction is estimated to be comparable in strength to that of a hydrogen bond.

Mixed valence compounds

Well-defined cluster compounds are numerous.^[61] In such cases, gold has a fractional oxidation state. A representative example is the octahedral species {Au(P(C₆H₅)₃)}₆²⁺. Gold chalcogenides, such as gold sulfide, feature equal amounts of Au(I) and Au(III).

Toxicity

Pure metallic (elemental) gold is non-toxic and non-irritating when ingested^[66] and is sometimes used as a food decoration in the form of gold leaf. Metallic gold is also a component of the alcoholic drinks Goldschläger, Gold Strike, and Goldwasser. Metallic gold is approved as a food additive in the EU (E175 in the Codex Alimentarius). Although gold ion is toxic, the acceptance of metallic gold as a food additive is due to its relative chemical inertness, and resistance to being corroded or transformed into soluble salts (gold compounds) by any known chemical process which would be encountered in the human body.

Soluble compounds (gold salts) such as gold chloride are toxic to the liver and kidneys. Common cyanide salts of gold such as potassium gold cyanide, used in gold electroplating, are toxic by virtue of both their cyanide and gold content. There are rare cases of lethal gold poisoning from potassium gold cyanide.^[67][68] Gold toxicity can be ameliorated with chelation therapy with an agent such as Dimercaprol.

Gold metal was voted Allergen of the Year in 2001 by the American Contact Dermatitis Society. Gold contact allergies affect mostly women.^[69] Despite this, gold is a relatively non-potent contact allergen, in comparison with metals like nickel.^[70]

Price

Like other precious metals, gold is measured by troy weight and by grams. When it is alloyed with other metals the term carat or karat is used to indicate the purity of gold present, with 24 carats being pure gold and lower ratings proportionally less. The purity of a gold bar or coin can also be expressed as a decimal figure ranging from 0 to 1, known as the millesimal fineness, such as 0.995 being very pure.

The price of gold is determined through trading in the gold and derivatives markets, but a procedure known as the Gold Fixing in London, originating in September 1919, provides a daily benchmark price to the industry. The afternoon fixing was introduced in 1968 to provide a price when US markets are open.

Historically gold coinage was widely used as currency; when paper money was introduced, it typically was a receipt redeemable for gold coin or bullion. In a monetary system known as the gold standard, a certain weight of gold was given the name of a unit of currency. For a long period, the United States government set the value of the US dollar so that one troy ounce was equal to $20.67 ($664.56/kg), but in 1934 the dollar was devalued to $35.00 per troy ounce ($1125.27/kg). By 1961, it was becoming hard to maintain this price, and a pool of US and European banks agreed to manipulate the market to prevent further currency devaluation against increased gold demand.

Swiss-cast 1 kg gold bar.

On March 17, 1968, economic circumstances caused the collapse of the gold pool, and a two-tiered pricing scheme was established whereby gold was still used to settle international accounts at the old $35.00 per troy ounce ($1.13/g) but the price of gold on the private market was allowed to fluctuate; this two-tiered pricing system was abandoned in 1975 when the price of gold was left to find its free-market level. Central banks still hold historical gold reserves as a store of value although the level has generally been declining. The largest gold depository in the world is that of the U.S. Federal Reserve Bank in New York, which holds about 3%^{[citation needed]} of the gold ever mined, as does the similarly laden U.S. Bullion Depository at Fort Knox.

In 2005 the World Gold Council estimated total global gold supply to be 3,859 tonnes and demand to be 3,754 tonnes, giving a surplus of 105 tonnes.^[71]

Since 1968 the price of gold has ranged widely, from a high of $850/oz ($27,300/kg) on January 21, 1980, to a low of $252.90/oz ($8,131/kg) on June 21, 1999 (London Gold Fixing).^[72] The period from 1999 to 2001 marked the "Brown Bottom" after a 20-year bear market.^[73] Prices increased rapidly from 1991, but the 1980 high was not exceeded until January 3, 2008 when a new maximum of $865.35 per troy ounce was set.^[74] Another record price was set on March 17, 2008 at $1023.50/oz ($32,900/kg).^[74] In late 2009, gold markets experienced renewed momentum upwards due to increased demand and a weakening US dollar. On December 2, 2009, Gold passed the important barrier of US$1200 per ounce to close at $1215.^[75] Gold further rallied hitting new highs in May 2010 after the European Union debt crisis prompted further purchase of gold as a safe asset.^[76][77] On March 1, 2011, gold hit a new all-time high of $1432.57, based on investor concerns regarding ongoing unrest in North Africa as well as in the Middle East.^[78]

Since April 2001 the gold price has more than tripled in value against the US dollar,^[79] prompting speculation that this long secular bear market has ended and a bull market has returned.^[80]

Symbolism

Gold bars at the Emperor Casino in Macau.

Gold has been highly valued in many societies throughout the ages. In keeping with this it has often had a strongly positive symbolic meaning closely connected to the values held in the highest esteem in the society in question. Gold may symbolize power, strength, wealth, warmth, happiness, love, hope, optimism, intelligence, justice, balance, perfection, summer, harvest and the sun.

Great human achievements are frequently rewarded with gold, in the form of gold medals, golden trophies and other decorations. Winners of athletic events and other graded competitions are usually awarded a gold medal (e.g., the Olympic Games). Many awards such as the Nobel Prize are made from gold as well. Other award statues and prizes are depicted in gold or are gold plated (such as the Academy Awards, the Golden Globe Awards, the Emmy Awards, the Palme d'Or, and the British Academy Film Awards).

Aristotle in his ethics used gold symbolism when referring to what is now commonly known as the "golden mean". Similarly, gold is associated with perfect or divine principles, such as in the case of Phi, which is sometimes called the "golden ratio".

Gold represents great value. Respected people are treated with the most valued rule, the "golden rule". A company may give its most valued customers "gold cards" or make them "gold members". We value moments of peace and therefore we say: "silence is golden". In Greek mythology there was the "golden fleece".

Gold is further associated with the wisdom of aging and fruition. The fiftieth wedding anniversary is golden. Our precious latter years are sometimes considered "golden years". The height of a civilization is referred to as a "golden age".

In Christianity gold has sometimes been associated with the extremities of utmost evil and the greatest sanctity. In the Book of Exodus, the Golden Calf is a symbol of idolatry. In the Book of Genesis, Abraham was said to be rich in gold and silver, and Moses was instructed to cover the Mercy Seat of the Ark of the Covenant with pure gold. In Christian art the halos of Christ, Mary and the Christian saints are golden.

Medieval kings were inaugurated under the signs of sacred oil and a golden crown, the latter symbolizing the eternal shining light of heaven and thus a Christian king's divinely inspired authority. Wedding rings have long been made of gold. It is long lasting and unaffected by the passage of time and may aid in the ring symbolism of eternal vows before God and/or the sun and moon and the perfection the marriage signifies. In Orthodox Christianity, the wedded couple is adorned with a golden crown during the ceremony, an amalgamation of symbolic rites.

In popular culture gold holds many connotations but is most generally connected to terms such as good or great, such as in the phrases: "has a heart of gold", "that's golden!", "golden moment", "then you're golden!" and "golden boy". Gold also still holds its place as a symbol of wealth and through that, in many societies, success.

State emblem

In 1965, the California Legislature designated gold "the State Mineral and mineralogical emblem."^[81]

In 1968, the Alaska Legislature named gold "the official state mineral."^[82]

See also

• Altai Mountains
• Bulk leach extractable gold
• Commodity fetishism (Marxist economic theory)
• Digital gold currency
• Gold Anti-Trust Action Committee
• Gold bubble
• Gold fingerprinting
• Gold Prospectors Association of America
• Mining in Roman Britain
• Prospecting
• Roman engineering
• Tumbaga

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80. ^ "Gold starts 2006 well, but this is not a 25-year high!". Ameinfo.com. http://www.ameinfo.com/75511.html. Retrieved 2009-04-05.
81. ^ California Government Code selection 420–429.8 (see § 425.1)
82. ^ Alaska Statutes (see§ 44.09.110)

Gold as an investment

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Reserves of SDR, forex and gold in 2006

A Good Delivery bar, the standard for trade in the major international gold markets.

Of all the precious metals, gold is the most popular as an investment.^[1] Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest). The gold market is subject to speculation as are other markets, especially through the use of futures contracts and derivatives. The history of the gold standard, the role of gold reserves in central banking, gold's low correlation with other commodity prices, and its pricing in relation to fiat currencies during the financial crisis of 2007–2010, suggest that gold behaves more like a currency than a commodity.^[2][3]

Contents [hide] 1 Gold price 2 Factors influencing the gold price 2.1 Central banks 2.2 Hedge against financial stress 2.3 Jewelery and industrial demand 2.4 Short selling 2.5 War, invasion and national emergency 3 Investment vehicles 3.1 Bars 3.2 Coins 3.3 Exchange-traded products (ETPs) 3.4 Certificates 3.5 Accounts 3.6 Derivatives, CFDs and spread betting 3.7 Mining companies 4 Investment strategies 4.1 Fundamental analysis 4.2 Gold versus stocks 4.3 Technical analysis 4.4 Using leverage 5 Taxation 6 Scams and frauds 7 See also 8 References 9 External links

[edit] Gold price

Gold has been used throughout history as money and has been a relative standard for currency equivalents specific to economic regions or countries. Many European countries implemented gold standards in the latter part of the 19th century until these were dismantled in the financial crises involving World War I. After World War II, the Bretton Woods system pegged the United States dollar to gold at a rate of US$35 per troy ounce. The system existed until the 1971 Nixon Shock, when the US unilaterally suspended the direct convertibility of the United States dollar to gold and made the transition to a fiat currency system. The last currency to be divorced from gold was the Swiss Franc in 2000.

Since 1919 the most common benchmark for the price of gold has been the London gold fixing, a twice-daily telephone meeting of representatives from five bullion-trading firms of the London bullion market. Furthermore, gold is traded continuously throughout the world based on the intra-day spot price, derived from over-the-counter gold-trading markets around the world (code "XAU"). The following table sets forth the gold price versus various assets and key statistics:

Year	Gold USD/ozt[4]	DJIA USD[5]	World GDP USD tn[6]	US Debt USD bn[7]	Trade Weighted US dollar Index[8]
1970	37	839	3.3	370
1975	140	852	6.4	533	33.0
1980	590	964	11.8	908	35.7
1985	327	1,547	13.0	1,823	68.2
1990	391	2,634	22.2	3,233	73.2
1995	387	5,117	29.8	4,974	90.3
2000	273	10,787	31.9	5,662	118.6
2005	513	10,718	45.1	8,170	111.6
2010	1,410	11,578	...	14,025	99.9
1970 to 2010 net change, %
	3,792	1,280	...	3,691	...
1975 (post US off gold standard) to 2010 net change, %
	929	1,259	...	2,531	...

In March 2008, the gold price exceeded US$1,000,^[9] achieving a nominal high of US$1,004.38. In real terms, actual value was still well below the US$599 peak in 1981 (equivalent to $1417 in U.S. 2008 dollar value). After the March 2008 spike, gold prices declined to a low of US$712.30 per ounce in November. Pricing soon resumed on upward momentum by temporarily breaking the US$1000 barrier again in late February 2009 but regressed moderately later in the quarter.

Later in 2009, the March 2008 intra-day spot price record of US$1,033.90 was broken several times in October, as the price of gold entered parabolic stages of successively new highs when a spike reversal to $1226 initiated a retrace of the price to the mid-October levels.

On April 18, 2011, gold reached a new record high of $1493.00 at the London Gold Fixing.^[10]

[edit] Factors influencing the gold price

Today, like most commodities, the price of gold is driven by supply and demand as well as speculation. However unlike most other commodities, saving and disposal plays a larger role in affecting its price than its consumption. Most of the gold ever mined still exists in accessible form, such as bullion and mass-produced jewelry, with little value over its fine weight — and is thus potentially able to come back onto the gold market for the right price.^[11][12] At the end of 2006, it was estimated that all the gold ever mined totalled 158,000 tonnes (156,000 LT; 174,000 ST).^[13] This can be represented by a cube with an edge length of 20.2 metres (66 ft).

Given the huge quantity of gold stored above-ground compared to the annual production, the price of gold is mainly affected by changes in sentiment, rather than changes in annual production.^[14] According to the World Gold Council, annual mine production of gold over the last few years has been close to 2,500 tonnes.^[15] About 2,000 tonnes goes into jewellery or industrial/dental production, and around 500 tonnes goes to retail investors and exchange traded gold funds.^[15]

[edit] Central banks

Central banks and the International Monetary Fund play an important role in the gold price. At the end of 2004 central banks and official organizations held 19 percent of all above-ground gold as official gold reserves.^[16] The ten year Washington Agreement on Gold (WAG), which dates from September 1999, limits gold sales by its members (Europe, United States, Japan, Australia, Bank for International Settlements and the International Monetary Fund) to less than 500 tonnes a year.^[17] European central banks, such as the Bank of England and Swiss National Bank, were key sellers of gold over this period.^[18] In 2009, this agreement was extended for a further five years, but with a smaller annual sales limit of 400 tonnes.^[19]

Although central banks do not generally announce gold purchases in advance, some, such as Russia, have expressed interest in growing their gold reserves again as of late 2005.^[20] In early 2006, China, which only holds 1.3% of its reserves in gold,^[21] announced that it was looking for ways to improve the returns on its official reserves. Some bulls hope that this signals that China might reposition more of its holdings into gold in line with other Central Banks. India has recently purchased over 200 tons of gold which has led to a surge in prices.^[22]

It is generally accepted that interest rates are closely related to the price of gold. As interest rates rise, the general tendency is for the gold price, which earns no interest, to fall, and as rates dip, for gold price to rise. As a result, gold price can be closely correlated to central banks via the monetary policy decisions made by them related to interest rates. For example if market signals indicate the possibility of prolonged inflation, central banks may decide to enact policies such as a hike in interest rates that could affect the price of gold in order to quell the inflation. An opposite reaction to this general principle can be seen after the European Central bank raised its interest rate on April 7th, 2011 for the first time since 2008.^[23] The price of gold responded with a muted response and then drove higher to hit new highs one day later.^[24]

[edit] Hedge against financial stress

Gold, like all precious metals, may be used as a hedge against inflation, deflation or currency devaluation. As Joe Foster, portfolio manager of the New York-based Van Eck International Gold Fund, explained in September 2010:

The currencies of all the major countries, including ours, are under severe pressure because of massive government deficits. The more money that is pumped into these economies – the printing of money basically – then the less valuable the currencies become.^[25]

If the return on bonds, equities and real estate is not adequately compensating for risk and inflation then the demand for gold and other alternative investments such as commodities increases. An example of this is the period of stagflation that occurred during the 1970s and which led to an economic bubble forming in precious metals.^[26][27]

[edit] Jewelery and industrial demand

Jewelery consistently accounts for over two-thirds of annual gold demand. India is the largest consumer in volume terms, accounting for 27% of demand in 2009, followed by China and the USA.^[28]

Industrial, dentistry and medical uses account for around 12% of gold demand. Gold has high thermal and electrical conductivity properties, along with a high resistance to corrosion and bacterial colonization. Jewelery and industrial demand has fluctuated over the past few years due to the steady expansion in emerging markets of middle classes aspiring to Western lifestyles, offset by the financial crisis of 2007–2010.^[29]

[edit] Short selling

The price of gold is also affected by various well-documented mechanisms of artificial price suppression, arising from fractional-reserve banking and naked short selling in gold, and particularly involving the London Bullion Market Association, the United States Federal Reserve System, and the banks HSBC and JPMorgan Chase.^{[30][31][32][33]} Gold market observers have noted for many years that the price of gold tends to fall artificially at the start of New York trading.^[34]

[edit] War, invasion and national emergency

When dollars were fully convertible into gold via the gold standard, both were regarded as money. However, most people preferred to carry around paper banknotes rather than the somewhat heavier and less divisible gold coins. If people feared their bank would fail, a bank run might result. This happened in the USA during the Great Depression of the 1930s, leading President Roosevelt to impose a national emergency and issue Executive Order 6102 outlawing the ownership of gold by US citizens.^[35] There was only one prosecution under the order, and in that case the order was ruled invalid by federal judge John M. Woolsey, on the technical grounds that the order was signed by the President, not the Secretary of the Treasury as required.^[36]

In times of war, people fear that their assets may be seized and that the currency may become worthless. They see gold as a solid asset which will always buy food or transportation. Thus in times of great uncertainty, particularly when war is feared, the demand for gold rises.^[37][38]

[edit] Investment vehicles

[edit] Bars

1 troy ounce (31 g) gold bar with certificate

The most traditional way of investing in gold is by buying bullion gold bars. In some countries, like Canada Argentina, Austria, Liechtenstein and Switzerland, these can easily be bought or sold at the major banks. Alternatively, there are bullion dealers that provide the same service. Bars are available in various sizes. For example in Europe, Good Delivery bars are approximately 400 troy ounces (12 kg).^[39] 1 kilogram (32 ozt) are also popular, although many other weights exist, such as the 10oz, 1oz, 10 g, 100 g, 1 kg, 1 Tael, and 1 Tola.

Bars generally carry lower price premiums than gold bullion coins. However larger bars carry an increased risk of forgery due to their less stringent parameters for appearance. While bullion coins can be easily weighed and measured against known values, most bars cannot, and gold buyers often have bars re-assayed. Larger bars also have a greater volume in which to create a partial forgery using a tungsten-filled cavity, which may not be revealed by an assay.^[40]

Efforts to combat gold bar counterfeiting include kinebars which employ a unique holographic technology and are manufactured by the Argor-Heraeus refinery in Switzerland.

[edit] Coins

The faces of a Krugerrand, the most common gold bullion coin.

Gold coins are a common way of owning gold. Bullion coins are priced according to their fine weight, plus a small premium based on supply and demand (as opposed to numismatic gold coins which are priced mainly by supply and demand based on rarity and condition).

The Krugerrand is the most widely-held gold bullion coin, with 46,000,000 troy ounces (1,400 tonnes) in circulation. Other common gold bullion coins include the Australian Gold Nugget (Kangaroo), Austrian Philharmoniker (Philharmonic), Austrian 100 Corona, Canadian Gold Maple Leaf, Chinese Gold Panda, Malaysian Kijang Emas, French Coq d’Or (Golden Rooster), Mexican Gold 50 Peso, British Sovereign, and American Gold Eagle.

Coins may be purchased from a variety of dealers both large and small. Fake gold coins are not uncommon, and are usually made of gold-plated lead.

[edit] Exchange-traded products (ETPs)

Gold exchange-traded products may include ETFs, ETNs, and CEFs which are traded like shares on the major stock exchanges. The first gold ETF, Gold Bullion Securities (ticker symbol "GOLD"), was launched in March 2003 on the Australian Stock Exchange, and originally represented exactly 0.1 troy ounces (3.1 g) of gold. As of November 2010, SPDR Gold Shares is the second-largest exchange-traded fund (ETF) in the world by market capitalization.^[41]

Gold ETPs represent an easy way to gain exposure to the gold price, without the inconvenience of storing physical bars. However exchange-traded gold instruments, even those which hold physical gold for the benefit of the investor, carry risks beyond those inherent in the precious metal itself. For example the most popular gold ETP (GLD) has been widely criticized, and even compared with mortgage-backed securities, due to features of its complex structure.^{[30][42][43][44][45]}

Typically a small commission is charged for trading in gold ETPs and a small annual storage fee is charged. The annual expenses of the fund such as storage, insurance, and management fees are charged by selling a small amount of gold represented by each certificate, so the amount of gold in each certificate will gradually decline over time.

Exchange-traded funds, or ETFs, are investment companies that are legally classified as open-end companies or Unit Investment Trusts (UITs), but that differ from traditional open-end companies and UITs.^[46] The main differences are that ETFs do not sell directly to investors and they issue their shares in what are called "Creation Units" (large blocks such as blocks of 50,000 shares). Also, the Creation Units may not be purchased with cash but a basket of securities that mirrors the ETF's portfolio. Usually, the Creation Units are split up and re-sold on a secondary market.

ETF shares can be sold in basically two ways. The investors can sell the individual shares to other investors, or they can sell the Creation Units back to the ETF. In addition, ETFs generally redeem Creation Units by giving investors the securities that comprise the portfolio instead of cash. Because of the limited redeemability of ETF shares, ETFs are not considered to be and may not call themselves mutual funds.^[46]

[edit] Certificates

Gold certificates allow gold investors to avoid the risks and costs associated with the transfer and storage of physical bullion (such as theft, large bid-offer spread, and metallurgical assay costs) by taking on a different set of risks and costs associated with the certificate itself (such as commissions, storage fees, and various types of credit risk).

Banks may issue gold certificates for gold which is allocated (non-fungible) or unallocated (fungible or pooled). Unallocated gold certificates are a form of fractional reserve banking and do not guarantee an equal exchange for metal in the event of a run on the issuing bank's gold on deposit.^[47] Allocated gold certificates should be correlated with specific numbered bars, although it is difficult to determine whether a bank is improperly allocating a single bar to more than one party.^[48]

The first paper bank notes were gold certificates. They were first issued in the 17th century when they were used by goldsmiths in England and The Netherlands for customers who kept deposits of gold bullion in their vault for safe-keeping. Two centuries later, the gold certificates began being issued in the United States when the US Treasury issued such certificates that could be exchanged for gold. The United States Government first authorized the use of the gold certificates in 1863. In the early 1930s the US Government restricted the private gold ownership in the United States and therefore, the gold certificates stopped circulating as money. Nowadays, gold certificates are still issued by gold pool programs in Australia and the United States, as well as by banks in Germany and Switzerland.

[edit] Accounts

Many types of gold "accounts" are available. Different accounts impose varying types of intermediation between the client and their gold. One of the most important differences between accounts is whether the gold is held on an allocated (non-fungible) or unallocated (fungible) basis. Another major difference is the strength of the account holder's claim on the gold, in the event that the account administrator faces gold-denominated liabilities (due to a short or naked short position in gold for example), asset forfeiture, or bankruptcy.

Many banks offer gold accounts where gold can be instantly bought or sold just like any foreign currency on a fractional reserve (non-allocated, fungible) basis. Swiss banks offer similar service on an allocated (non-fungible) basis. Pool accounts, such as those offered by Kitco, facilitate highly liquid but unallocated claims on gold owned by the company. Digital gold currency systems operate like pool accounts and additionally allow the direct transfer of fungible gold between members of the service. BullionVault, GoldMoney and Anglo Far-East allow clients to create a bailment on allocated (non-fungible) gold, which becomes the legal property of the buyer.

[edit] Derivatives, CFDs and spread betting

Derivatives, such as gold forwards, futures and options, currently trade on various exchanges around the world and over-the-counter (OTC) directly in the private market. In the U.S., gold futures are primarily traded on the New York Commodities Exchange (COMEX) and Euronext.liffe. In India, gold futures are traded on the National Commodity and Derivatives Exchange (NCDEX) and Multi Commodity Exchange (MCX).^[49]

As of 2009, holders of COMEX gold futures have experienced problems taking delivery of their metal. Along with chronic delivery delays, some investors have received delivery of bars not matching their contract in serial number and weight. The delays cannot be easily explained by slow warehouse movements, as the daily reports of these movements show little activity. Because of these problems, there are concerns that COMEX may not have the gold inventory to back its existing warehouse receipts.^[50]

Firms such as Cantor Index, CMC Markets, IG Index and City Index, all from the UK, provide contract for difference (CFD) or spread bets on the price of gold.

[edit] Mining companies

These do not represent gold at all, but rather are shares in gold mining companies. If the gold price rises, the profits of the gold mining company could be expected to rise and as a result the share price may rise. However, there are many factors to take into account and it is not always the case that a share price will rise when the gold price increases. Mines are commercial enterprises and subject to problems such as flooding, subsidence and structural failure, as well as mismanagement, theft and corruption. Such factors can lower the share prices of mining companies.

The price of gold bullion is volatile, but unhedged gold shares and funds are regarded as even higher risk and even more volatile. This additional volatility is due to the inherent leverage in the mining sector. For example, if you own a share in a gold mine where the costs of production are $300 per ounce and the price of gold is $600, the mine's profit margin will be $300. A 10% increase in the gold price to $660 per ounce will push that margin up to $360, which represents a 20% increase in the mine's profitability, and potentially a 20% increase in the share price. Furthermore, at higher prices, more ounces of gold become economically viable to mines, enabling companies to add to their reserves. Conversely, share movements also amplify falls in the gold price. For example, a 10% fall in the gold price to $540 will decrease that margin to $240, which represents a 20% fall in the mine's profitability, and potentially a 20% decrease in the share price.

To reduce this volatility, some gold mining companies hedge the gold price up to 18 months in advance. This provides the mining company and investors with less exposure to short term gold price fluctuations, but reduces returns when the gold price is rising.

[edit] Investment strategies

[edit] Fundamental analysis

Investors using fundamental analysis analyze the macroeconomic situation, which includes international economic indicators, such as GDP growth rates, inflation, interest rates, productivity and energy prices. They would also analyze the yearly global gold supply versus demand. Over 2005 the World Gold Council estimated yearly global gold supply to be 3,859 tonnes and demand to be 3,754 tonnes, giving a surplus of 105 tonnes.^[51] While gold production is unlikely to change in the near future, supply and demand due to private ownership is highly liquid and subject to rapid changes. This makes gold very different from almost every other commodity.^[11][12] Identifiable investment demand for gold, which includes gold exchange-traded funds, bars and coins, was up 64 percent in 2008 over the year before.^[52]

[edit] Gold versus stocks

Dow/Gold Ratio 1968-2008

In the last century, major economic crises (such as the Great Depression, World War II, the first and second oil crisis) lowered the Dow/gold ratio, an indicator of how bad a recession is and whether the outlook is deteriorating or improving, to a value well below 4. The ratio fell on February 18, 2009 to below 8.^[52] During these difficult times, many investors tried to preserve their assets by investing in precious metals, most notably gold and silver.

The performance of gold bullion is often compared to stocks due to their fundamental differences. Gold is regarded by some as a store of value (without growth) whereas stocks are regarded as a return on value (i.e., growth from anticipated real price increase plus dividends). Stocks and bonds perform best in a stable political climate with strong property rights and little turmoil. The attached graph shows the value of Dow Jones Industrial Average divided by the price of an ounce of gold. Since 1800, stocks have consistently gained value in comparison to gold in part because of the stability of the American political system.^[53] This appreciation has been cyclical with long periods of stock outperformance followed by long periods of gold outperformance. The Dow Industrials bottomed out a ratio of 1:1 with gold during 1980 (the end of the 1970s bear market) and proceeded to post gains throughout the 1980s and 1990s. The gold price peak of 1980 also coincided with the Soviet Union's invasion of Afghanistan and the threat of the global expansion of communism. The ratio peaked on January 14, 2000 a value of 41.3 and has fallen sharply since.

On November 30, 2005, Rick Munarriz of The Motley Fool posed the question of which represented a better investment: a share of Google or an ounce of gold. The specific comparison between these two very different investments seems to have captured the imagination of many in the investment community and is serving to crystallize the broader debate.^[54][55] At the time of writing, a share of Google's stock was $405 and an ounce of gold was one day from breaking the $500 barrier, which it did December 1. On January 4, 2008 23:58 New York Time, it was reported that an ounce of gold outpaced the share price of Google by 30.77%, with gold closing at $859.19 per ounce and a share of Google closing at $657 on U.S. market exchanges. On January 24, 2008, the gold price broke the $900 mark per ounce for the first time. The price of gold topped $1,000 an ounce for the first time ever on March 13, 2008 amid recession fears in the United States.^[56] Google closed 2008 at $307.65 while gold closed the year at $866. Leading into 2010, Google had doubled off that (100%), whereas gold had risen 40%.

The analysis of log-linear oscillations in the gold price dynamics for 2003–2010 conducted recently by Askar Akayev's research group has allowed them to forecast a collapse in gold prices in April – June 2011.^[57]

[edit] Technical analysis

As with stocks, gold investors may base their investment decision partly on, or solely on, technical analysis. Typically, this involves analyzing chart patterns, moving averages, market trends and/or the economic cycle in order to speculate on the future price.

[edit] Using leverage

Bullish investors may choose to leverage their position by borrowing money against their existing assets and then purchasing gold on account with the loaned funds. Leverage is also an integral part of buying gold derivatives and unhedged gold mining company shares (see gold mining companies). Leverage or derivatives may increase investment gains but also increases the corresponding risk of capital loss if/when the trend reverses.

[edit] Taxation

Main article: Taxation of precious metals

Gold maintains a special position in the market with many tax regimes. For example, in the European Union the trading of recognised gold coins and bullion products are free of VAT. Silver, and other precious metals or commodities, do not have the same allowance. Other taxes such as capital gains tax may also apply for individuals depending on their tax residency. U.S. citizens may be taxed on their gold profits at 15, 23, 28 or 35 percent, depending on the investment vehicle used.^[58]

USA: Due to section 9006 of the U.S. Patient Protection and Affordable Care Act, starting on January 1, 2012, IRS tax form 1099 will be required for all purchases of goods and services that exceed $600 per calendar year. This new reporting requirement will cover precious metals. With gold at $1200 per ounce, this would make it impossible to sell a typical one-ounce bullion coin without IRS paperwork. As of July 2010^[update] the bullion industry is fighting the regulation, and California Representative Dan Lungren has introduced legislation to have the relevant section of the Act reversed.^[59]

[edit] Scams and frauds

Gold attracts its fair share of fraudulent activity. Some of the most common to be aware of are:

• High-yield investment programs - HYIPs are usually just pyramid schemes dressed up with no real value underneath. Using gold in their prospectus makes them seem more solid and trustworthy.
• Advance fee fraud - Various emails circulate on the Internet for buyers or sellers of up to 10,000 metric tonnes of gold. This is more gold than the US Federal Reserve owns. Often naive middlemen are drafted in as hopeful brokers, and usually mention mythical terms like 'Swiss Procedure' or 'FCO' (Full Corporate Offer). The end-game of these scams is unknown, but they probably just attempt to extract a small 'validation' sum out of the innocent buyer/seller from their hope of getting the big deal.^[60]
• Gold dust sellers - This scam persuades an investor there is real gold with a trial quantity, then eventually delivers brass filings or similar.
• Counterfeit gold coins.
• Shares in fraudulent mining companies with no gold reserves, or potential of finding gold.^{[citation needed]}
• Cash for gold - With the rise in the value of gold due to the financial crisis of 2007-2010, there has been a surge in companies that will buy personal gold in exchange for cash, or sell investments in gold bullion and coins. Several of these have prolific marketing plans and high value spokesmen, such as prior vice presidents. Many of these companies are under investigation for a variety of securities fraud claims, as well as laundering money for terrorist organizations.^{[61][62][63][64]} Also given that ownership is often not verified, many companies are considered to be receiving stolen property, and multiple laws are under consideration on methods to curtail this.^[65][66]

[edit] See also

• Full-reserve banking
• Gold exchange-traded product
• Peak gold

Rare materials as investments

• Diamonds as an investment
• Palladium as an investment
• Platinum as an investment
• Silver as an investment

[edit] References

1. ^ "The Industry Handbook: Precious Metals". Investopedia. http://www.investopedia.com/features/industryhandbook/metals.asp.
2. ^ Jeff Opdyke (2010-08-21). "Rethinking Gold: What if It Isn't a Commodity After All?". The Wall Street Journal.
3. ^ Ambrose Evans-Pritchard (2010-06-20). "Gold reclaims its currency status as the global system unravels". The Daily Telegraph.
4. ^ LBMA Gold Fixings yearly close, rounded to nearest $
5. ^ Dow Jones Industrial Average yearly close, rounded to nearest point
6. ^ The UN Statistics Division world GDP
7. ^ Historical Debt Outstanding - Annual 1950 - 1999, The Debt to the Penny. Total Public Debt Outstanding (including Intragovernmental Holdings), rounded to nearest billion $
8. ^ Nominal broad dollar index US Federal Reserve. Gives the comparative international value of the USD against a basket of the currencies of the US's major trading partners. Base date for index (100.0000) was Jan 1997. Index value shown as at June of the relevant year, rounded to nearest 1/10 of a point
9. ^ "2008 London Gold Fixings". Lbma.org.uk. 2008-12-31. http://www.lbma.org.uk/2008dailygold.htm. Retrieved 2010-03-16.
10. ^ LBMA.org.uk
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13. ^ "World Gold Council". http://www.invest.gold.org/sites/en/why_gold/demand_and_supply/. Retrieved 2008-07-04.
14. ^ "Frequently Asked Questions", World Gold Council, http://www.gold.org/discover/knowledge/faqs .
15. ^ ^{a b} "Please login to download > World Gold Council, the information resource for gold, investment, jewellery, science and technology, historical and culture > Please login to download". Gold.org. http://www.gold.org/deliver.php?file=/value/stats/statistics/pdf/Supply_Demand.pdf. Retrieved 2010-03-16.
16. ^ "Official gold reserves". Gold.org. http://www.gold.org/value/markets/supply_demand/central_banks.html. Retrieved 2010-03-16.
17. ^ "400 tonnes/year". Gold.org. 1999-09-26. http://www.gold.org/pr_archive/html/Wr991006.htm. Retrieved 2010-03-16.
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19. ^ Central banks revive gold bulls, Financial Times, 8 August 2009, http://www.ft.com/cms/s/0/9acfe00e-83b1-11de-a24e-00144feabdc0.html, retrieved 12 June 2010
20. ^ "Russia". En.rian.ru. 2005-11-28. http://en.rian.ru/russia/20051128/42241821.html. Retrieved 2010-03-16.
21. ^ A Gold Play on the Dollar's Demise Seeking Alpha
22. ^ 2:38 p.m. Today2:38 p.m. March 16, 2010 (2006-11-09). "Dollar, gold see sharp moves on China's diversification talk". MarketWatch. http://www.marketwatch.com/news/story/story.aspx?guid=%7B23556CD8-DCCA-4870-BBF9-B36E41451F24%7D. Retrieved 2010-03-16.
23. ^ "European Central Bank Raises Interest Rates". GoldAlert.com. 2011-04-07. http://www.goldalert.com/gold-price-hovers-at-1460-as-ecb-hikes-rates-2/. Retrieved 2011-04-07.
24. ^ "Record Highs After ECB Interest Hike". GoldAlert.com. 2011-04-08. http://www.goldalert.com/gold-stocks-rally-hui-hits-all-time-high/. Retrieved 2011-04-08.
25. ^ Why gold, silver are up while inflation is low, The Dallas Morning News, September 26, 2010
26. ^ Rogers, Jim (2004). Hot Commodities : How Anyone Can Invest Profitably in the World's Best Market. New York: Random House. ISBN 1-4000-6337-X. OCLC 56559347. ^{[page needed]}
27. ^ Wiggin, Addison; Justice Litle (2006). Gold: The Once and Future Money. New York: Wiley. ISBN 0-470-04766-6. OCLC 70173338. ^{[page needed]}
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30. ^ ^{a b} Catherine Austin Fitts, Carolyn Betts, "GLD and SLV: Disclosure in the Precious Metals Puzzle Palace", Solari, http://solari.com/archive/Precious_Metals_Puzzle_Palace/
31. ^ Adrian Douglas (March 14, 2010). "More Fed minutes document gold market manipulation". Gold Anti-Trust Action Committee. http://gata.org/node/8429.
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